Australian Skills Quality Authority Annual Report

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1 Australian Skills Quality Authority Annual Report

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3 Australian Skills Quality Authority Annual Report Australian Skills Quality Authority Annual Report i

4 Australian Skills Quality Authority Annual Report Contact Enquiries and feedback about this report can be directed to: Manager, Governance, Policy and Quality Australian Skills Quality Authority GPO Box 9928 Melbourne Vic For more information about the Australian Skills Quality Authority visit Online reports The Australian Skills Quality Authority website is located at This report can be downloaded from the page ISSN (Print) (Online) Creative Commons With the exception of the coats of arms, logos, emblems, images, other third-party material or devices protected by a trademark, this content is licensed under the Creative Commons Australia Attribution 3.0 Licence. We request attribution as: Commonwealth of Australia (Australian Skills Quality Authority) All other rights reserved. ii Australian Skills Quality Authority Annual Report

5 Letter of transmittal 26 September 2014 The Hon Ian Macfarlane MP Minister for Industry Parliament House CANBERRA ACT 2600 Dear Minister, I am pleased to present you with the third annual report for the Australian Skills Quality Authority (ASQA), which covers 1 July June ASQA, as the national vocational education and training regulator, is required under section 215 (1) of the National Vocational Education and Training Regulator Act 2011 to prepare and give to the Minister for presentation to Parliament a report relating to the performance of the regulator s functions during the year. I advise that this report has been prepared in accordance with section 70 of the Public Service Act 1999 and the Requirements for Annual Reports for Departments, Agencies and FMA Act Bodies 2013, prepared by the Department of the Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts and Audit. In addition, and as required by the Commonwealth Fraud Control Guidelines, I certify that I am satisfied that the Australian Skills Quality Authority has prepared fraud risk assessments and fraud control plans; has in place appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes to meet ASQA s specific needs; and has taken all reasonable measures to minimise the incidence of fraud, and to investigate and recover the proceeds of fraud against the Authority. Yours sincerely, Christopher Robinson Chief Commissioner and Chief Executive Officer Australian Skills Quality Authority iii

6 Contents Letter of transmittal iii List of figures vi List of tables vii About this report viii Chief Commissioner s review 1 Agency overview 3 Establishment 5 Our mission 5 Our vision 5 Role and functions 6 Legislation 8 Establishing legislation 8 Education for overseas students (ESOS) legislation 8 Legislative instruments 8 National Vocational Education and Training Regulator (Charges) Act Commissioners 10 Mr Christopher Robinson, Chief Commissioner 10 Dr Dianne Orr, Deputy Chief Commissioner and Commissioner Compliance 10 The Hon Michael Lavarch AO, Commissioner Risk Analysis and Investigation 11 Organisation structure 12 Outcome and program structure 13 Report on performance 15 Performance summary 16 Regulation 18 ASQA s regulation of RTOs 18 ASQA s regulation of CRICOS providers 19 Regulation of ELICOS providers 19 Applications overview 19 Rejected applications 21 Ensuring providers meet regulatory requirements audit 22 Ensuring providers meet regulatory requirements regulatory decisions 24 Monitoring levels of provider compliance with the standards 26 Provider non-compliance with the standards governing training and assessment 27 Ensuring courses meet regulatory requirements 29 Accountable and transparent regulation 31 Regulatory accountability timely regulatory processes 31 Regulatory accountability reasonable costs to regulate the industry 33 iv Australian Skills Quality Authority Annual Report

7 Proportionate, risk-based regulation 35 Risk assessment and risk model 36 Strategic reviews 38 Addressing potential risks in asbestos removal training 42 Collecting complaints data to inform risk-based decision making 42 Using data to assess risk changes to ASQA s complaints-handling process in Investigation and enforcement decisive action to address non-compliance 45 ASQA s program of VET Regulatory Reform making it easier for high-quality providers to meet their obligations 46 Stakeholder relationships 48 Commissioner engagement with stakeholders 48 Online communications 50 Service delivery 50 Industry engagement 51 Stakeholder and provider surveys 52 ASQA site audit surveys 56 Business processes 57 Using technology to regulate efficiently ICT Strategic Initiative progress 57 Quality Management System continuous improvement 59 Management and accountability 61 Governance 62 Commissioners meetings 62 Senior Management Group 62 Input into policy review of the Standards for NVR RTOs Internal reporting and audit 64 Ethical standards 65 Fraud control 65 Budget and finance 66 Financial management and financial performance 66 Purchasing 67 Consultants 68 Assets management 68 Outcomes through purchaser-provider arrangements 68 Australian National Audit Office access clauses 68 Exempt contracts 68 People and culture 70 Work health and safety 71 Payroll 71 Reports 72 ASQA Enterprise Agreement 73 Performance pay 73 v

8 External scrutiny 74 Review of decisions 74 Reconsideration of decisions by ASQA 74 Review by the Administrative Appeals Tribunal or Federal Court 75 Applications for review of decision resolved between ASQA and applicant 76 Judicial review by the Federal Court 76 Other reports on operations 77 Financial statements 79 Appendix 1 Regulatory decisions overview 140 Administrative sanctions 140 Appendix 2 Other mandatory information 144 Ecologically Sustainable Development and Environmental Performance Reporting 144 Advertising and market research 144 Grant programs 145 Disability reporting 145 Information Publication Scheme 145 Appendix 3 ASQA addresses 146 Appendix 4 Agency resource statement 147 Appendix 5 Expenses and resources for outcome 148 Glossary 150 List of abbreviations 156 List of requirements 158 Index 161 List of figures Figure 1: ASQA organisational structure as at 30 June Figure 2: Applications received and completed by ASQA , , Figure 3: Applications received, by application type, 1 July June Figure 4: Applications for registration approved and rejected by ASQA , , Figure 5: Outcomes of all audits finalised 1 July June Figure 6: Number of providers to which written directions, conditions, sanctions, offences or civil penalties were applied, by year, , , Figure 7: Levels of compliance, by standard, found at audits of existing RTOs, 1 July 2013 to 13 June Figure 8: Levels of compliance with each part of Standard 15, found at audits of existing RTOs, 1 July 2013 to 13 June Figure 9: Courses accredited by ASQA, , , Figure 10: Accreditation applications completed, 1 July June 2014, by outcome of application 30 Figure 11: Average provider ratings of The time ASQA took to act on an application, by application type 33 vi Australian Skills Quality Authority Annual Report

9 Figure 12: Outcomes of complaints finalised by ASQA 1 July June Figure 13: Issues most frequently raised in complaints about training providers, 1 July June Figure 14: Average stakeholder responses to ASQA stakeholder surveys 2012, 2013 and Figure 15: Average provider responses to ASQA provider surveys 2013 and Figure 16: Average results of four ASQA site audit surveys conducted in the period 1 July June List of tables Table 1: ASQA outcome and program structure Table 2: ASQA regulated RTOs , and Table 3: Decisions to reject applications as a percentage of applications completed, , , Table 4: Risk factors under the ASQA risk model in use as at 30 June Table 5: ASQA employees by location as at 30 June Table 6: ASQA employees by classification as at 30 June Table 7: ASQA employees by status as ongoing/non-ongoing as at 30 June Table 8: ASQA employees by full-time/part-time status as at 30 June Table 9: ASQA employees by gender, as at 30 June Table 10: Outcomes of reconsideration applications finalised by ASQA in Table 11: Total Tribunal and Court review applications received, closed and carried over as at 30 June Table 12: Outcomes of closed Tribunal matters, 1 July June Table 13: Table 14: Table 15: Table 16: Providers affected by ASQA decisions to cancel their registration, 1 July June Providers affected by ASQA decisions to suspend their registration, 1 July June ASQA decisions to impose administrative sanctions (other than cancellation or suspension of registration) 142 Providers affected by ASQA decisions to reject their application/s for re-registration, 1 July June Table 17: Australian Skills Quality Authority Resource Statement Budget Estimates for as at Budget May Table 18: Budgeted expenses for Outcome vii

10 About this report This is the third annual report for ASQA, which was established on 1 July This report documents the activities and performance of ASQA from 1 July 2013 to 30 June The report is presented in seven parts: Chief Commissioner s review A review of ASQA s operations by ASQA s Chief Commissioner and Chief Executive Officer. ASQA overview An outline of ASQA s purpose and functions. Report on performance A report on ASQA s performance in relation to the outcome and output framework described in the Portfolio Budget Statements for the Industry, Innovation, Climate Change, Science, Research and Tertiary Education portfolio. In accordance with Part 10, section 215 (3)(a) of the National Vocational Education and Training Regulator Act 2011, this Report on performance reports on each of the objectives set out in the ASQA Strategic Plan 1 July 2013 to 30 June 2016 and Operational Plan 1 July 2013 to 30 June 3014 and on the key performance indicators associated with each of these objectives. Management and accountability A report on ASQA s management practices, including corporate governance practices, human resources, internal controls, external scrutiny, financial management and financial performance. Financial statements Includes the audited financial statements for and the audit report. Appendices Includes mandatory information and statistics. References Includes a glossary, a list of abbreviations and an index. viii Australian Skills Quality Authority Annual Report

11 Chief Commissioner s review The financial year proved to be an important and busy period for the Australian Skills Quality Authority (ASQA) the national vocational education and training (VET) regulator. This third year of operation has seen ASQA moving from a transaction-based regulatory approach where most regulatory action is triggered by applications towards a more proactive, data-led style of regulation, in which regulatory scrutiny is increasingly driven by assessment of risk. ASQA implemented a set of fee increases approved by the Ministerial Standing Council on Tertiary Education, Skills and Employment (SCOTESE) which took effect from 30 June ASQA also undertook its inaugural Strategic Reviews into hot spots in the VET sector, made a significant contribution to the development of the national training standards, and commenced implementing a new, streamlined regulatory approach aimed at reducing the regulatory burden on providers. From late 2013, ASQA began to examine ways to streamline its regulatory activities and reduce the regulatory burden on the training providers it regulates. Our leadership group met in October 2013 to discuss the ways in which ASQA can operate as efficiently as possible, as well as how ASQA can make it easier for high-quality providers to meet the national standards. Six distinct ASQA VET Regulatory Reform projects were developed as a result. Work on these projects resulted in a number of initiatives being announced towards the end of the reporting period, and these are discussed on page 46. Further initiatives are in development and will be implemented in After undertaking considerable research in , ASQA released the reports from its inaugural three Strategic Reviews in The reviews focused on training in the aged and community care sector; entry-level construction industry training; and the marketing and advertising practices of training providers. The reviews identified numerous issues in each area and made a number of recommendations. The reviews and their findings were largely welcomed by the VET sector, with several key stakeholders working with ASQA to implement the recommendations. ASQA also commenced the second round of Strategic Reviews during These reviews will focus on training in childcare, equine safety skills, and security, and will be released in Between 1 July 2013 and 30 June 2014, ASQA received 7619 applications and finalised 8817 applications. ASQA has placed considerable attention on streamlining and increasing the efficiency of its application processes throughout the year. The results of this can clearly be seen in both the number of applications completed, and in the increased provider satisfaction with ASQA, reported in the 2014 provider survey on page 52. The overwhelming majority of applications 8382 or close to 95 per cent were approved. In , ASQA received approval from the then SCOTESE and the Australian Government to implement a revised schedule of fees and charges. In approving ASQA s revised schedule of fees and charges, SCOTESE requested an independent efficiency review of ASQA s operations be undertaken. Senior management and staff from across ASQA provided information about ASQA s operations to representatives from PricewaterhouseCoopers, which was engaged by the Department of Industry to undertake the review during The review was finalised and published in July Further information about the review can be found on page 77 of this report. The Standards for NVR Registered Training Organisations (RTOs) 2012 are the national standards that registered training organisations must meet. The standards ensure nationally consistent, high-quality training and assessment services for the clients of Australia s VET system. Since their introduction, ASQA has received considerable feedback from providers and other stakeholders indicating that the standards are difficult to interpret. ASQA has collated this feedback, along with the significant intelligence on provider compliance that ASQA has compiled since commencing operations in 1

12 2011 (including the findings of the Strategic Reviews). This intelligence has assisted ASQA to make a substantial contribution to the review of the standards. The work associated with the implementation of revised standards will be one of ASQA s top priorities in the financial year. In addition to the work involved in the implementation of the new standards, the financial year promises to be another busy time for ASQA. ASQA will continue to build on the guidance and information it makes available to providers to help them meet the requirements of registration. ASQA will also look to implement additional ways to reduce the regulatory burden on providers. Key projects for ASQA going forward include the finalisation and implementation of our new risk model, and stage one of the roll-out of a new Information and Communication Technology (ICT) system, which will make it easier for providers to manage their registrations online. I would like to thank my fellow Commissioners, Dr Dianne Orr and Michael Lavarch; other members of the Senior Management Group; and all staff from across ASQA for their efforts during this very busy and positive year for ASQA. Christopher Robinson Chief Commissioner and Chief Executive Officer 2 Australian Skills Quality Authority Annual Report

13 Agency overview

14 The VET sector plays a vital role in developing Australia s national workforce. Through the delivery of industry-developed training packages, the sector helps to ensure Australia has an educated and highly skilled population. Australia s VET sector has a reputation for delivering quality programs and quality outcomes. The Australian Skills Quality Authority (ASQA) was established in July 2011 to maintain the strength and reputation of the VET sector, both nationally and internationally. ASQA is the national regulator for: registered training organisations (RTOs), providers who deliver VET qualifications and courses providers who deliver VET courses to overseas students accredited VET courses, and some of those providers that deliver intensive English language courses to overseas students. As the national regulator, ASQA seeks to make sure that students and employers have confidence that providers are delivering good-quality programs. Employers can have confidence that VET graduates have the skills and competencies that they need for employment. Students can be confident that training will be of a high standard and meet their needs. ASQA regulates using a targeted, risk-based approach, which it has worked to embed over its three years of operation. Consistent with the Australian Government s policy to reduce the regulatory burden on providers and boost productivity in the economy, ASQA seeks to reward high-quality, low-risk providers by reducing the regulatory burdens they face. In line with this approach, most of ASQA s resources focus on ensuring non-compliant providers become fully compliant, or else are subject to appropriate regulatory action. Where providers do not meet the required national standards, ASQA can apply several enforcement options. These include a range of escalating sanctions (including suspension or cancellation of registration) as well as investigation and enforcement procedures. ASQA takes decisive action where providers are unable or unwilling to meet their obligation to deliver high-quality training that meets the required standards. 4 Australian Skills Quality Authority Annual Report

15 Establishment In December 2009, the Council of Australian Governments (COAG) agreed to a model for national regulation for the VET sector, comprising a national regulator and a separate standards setting council. In February 2011, COAG established the Intergovernmental Agreement for Regulatory Reform of Vocational Education and Training. 1 The agreement provided the framework to establish the national VET regulator ASQA. ASQA was established on 1 July 2011 by the enactment of the National Vocational Education and Training Regulator Act 2011 and supplementary legislation. Prior to the establishment of ASQA on 1 July 2011, regulatory arrangements for VET were dispersed between eight states and territories. Section 51 (xxxvii) of the Australian Constitution permits the Commonwealth to legislate on matters referred to the Commonwealth by any state. ASQA s establishment as the national VET regulator has involved the referral of powers to the Commonwealth from all states (except Victoria and Western Australia) as set out in the intergovernmental agreement. The exercise of the Commonwealth s constitutional power provides for ASQA s operation in the Australian Capital Territory and the Northern Territory. ASQA assumed regulatory responsibility for VET from state and territory jurisdictions in phases throughout : On 1 July 2011, ASQA commenced regulating VET providers in New South Wales, the Northern Territory, and the Australian Capital Territory. In addition, ASQA also became the regulatory body for VET providers in Victoria and Western Australia that provided training to international students, or that operated in a territory or any state other than Victoria or Western Australia, on that date. Tasmania transferred to ASQA s jurisdiction on 15 February 2012, followed by South Australia on 26 March 2012 and Queensland on 29 June Our mission Effective regulation by ASQA contributes to students, employers, industry, government and the community having full confidence in the quality of training and assessment delivered by Australia s vocational education and training and English language providers. Our vision Agile, responsive, risk-based regulation. 1 The Victorian and Western Australian governments did not refer their powers to enable full national regulation of VET. However, the Commonwealth legislation means that providers in Victoria and Western Australia, that deliver courses to international students; or that operate in New South Wales, the Australian Capital Territory, the Northern Territory, Tasmania, South Australia or Queensland fall within the jurisdiction of the national VET regulator. Agency overview 5

16 Role and functions ASQA s primary role is to ensure that regulation of training is carried out in such a way that individuals and employers have full confidence in the training delivered through the Australian VET system. ASQA seeks to ensure that Australian vocational education and training providers are delivering high-quality training outcomes, leading to VET graduates having the appropriate skills and competencies to support the demands of the Australian labour market. ASQA is able to do this by applying a strong audit and monitoring regime, as well as a range of escalating sanctions, to manage the risks to quality vocational education and training. The objects of the National Vocational Education and Training Regulator Act 2011 are: to provide for national consistency in the regulation of vocational education and training to regulate VET using a standards-based quality framework and risk assessments to protect and enhance quality, flexibility and innovation in VET, and Australia s reputation for VET nationally and internationally to provide a regulatory framework that encourages and promotes a VET system that is appropriate to meet Australia s social and economic needs for a highly educated and skilled population to protect students undertaking, or proposing to undertake Australian VET by ensuring the provision of quality VET, and to facilitate access to accurate information relating to the quality of VET. ASQA has the following functions under the National Vocational Education and Training Regulator Act 2011: to register an organisation as a registered training organisation to accredit courses that may be offered and/or provided by registered training organisations to carry out compliance audits of registered training organisations to promote, and encourage the continuous improvement of, a registered training organisation s capacity to provide a VET course or part of a VET course to advise and make recommendations to the Minister on matters relating to vocational education and training to advise and make recommendations to the Minister responsible for training for a state or territory on specific matters relating to vocational education and training in the state or territory to advise and make recommendations to the Ministerial Council on general matters relating to vocational education and training in all jurisdictions to collect, analyse, interpret and disseminate information about vocational education and training to publish performance information, of a kind prescribed by the National Vocational Education and Training Regulations 2011, relating to registered training organisations to conduct training programs relating to the regulation of registered training organisations and/or the accreditation of courses 6 Australian Skills Quality Authority Annual Report

17 to enter into arrangements with occupational licensing bodies, other industry bodies, or both, for the purpose of ensuring compliance by registered training organisations with the National Vocational Education and Training Regulator Act 2011 to cooperate with a regulatory authority of another country that has responsibility relating to the quality or regulation of vocational education and training for all, or part, of the country to develop relationships with its counterparts in other countries to develop key performance indicators, to be agreed by the Minister, against which the Regulator s performance can be assessed each financial year to develop service standards that the Regulator must meet in performing its functions any other function relating to vocational education and training that is set out in a legislative instrument made by the Minister such other functions as are conferred on ASQA by or under: the National Vocational Education and Training Regulator Act 2011, or the Education Services for Overseas Students Act 2000 or any other law of the Commonwealth. Agency overview 7

18 Legislation ASQA s regulation is supported by a comprehensive framework of legislation and standards, including the VET Quality Framework, the Standards for Accredited Courses, and related legislation for the providers of courses to overseas students. The VET Quality Framework comprises the: Standards for National VET Regulator Registered Training Organisations Fit and Proper Person Requirements Financial Viability Risk Assessment Requirements Data Provision Requirements, and Australian Qualifications Framework. Establishing legislation ASQA was established on 1 July 2011 through the enactment of the: National Vocational Education and Training Regulator Act 2011 National Vocational Education and Training Regulator (Consequential Amendments) Act 2011, and National Vocational Education and Training Regulator (Transitional Provisions) Act Education for overseas students (ESOS) legislation During , ASQA as a designated authority under the Education Services for Overseas Students Act 2000 (ESOS Act) assessed the registration and re-registration of courses on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) and monitored providers against the: Education Services for Overseas Students Act 2000 (ESOS Act), and National Code of Practice for Registration Authorities and Providers of Education and Training for Overseas Students ASQA also registers providers on CRICOS to deliver English Language Intensive Courses for Overseas Students (ELICOS). Providers delivering ELICOS are required to comply with the above ESOS legislation. In addition, ASQA monitors providers delivering ELICOS courses against the ELICOS National Standards. Legislative instruments Under the National Vocational Education and Training Regulator Act 2011, the national training standards are established as legislative instruments mandatory standards which are binding in their application. This means that providers are required to comply at all times with the standards prescribed in the legislative instruments, in order to be registered as a training provider in Australia. In performing its functions, ASQA is supported by a range of legislative instruments: Standards for NVR Registered Training Organisations 2012, standards to ensure nationally consistent, high-quality training and assessment across Australia s VET system 8 Australian Skills Quality Authority Annual Report

19 Financial Viability Risk Assessment Requirements 2011, relating to the financial viability risk assessment of registered and applicant training organisations Data Provision Requirements 2012, relating to the requirement for providers to provide ASQA with data upon request and to submit quality indicator data annually Fit and Proper Person Requirements 2011, relating to the assessment of persons who have some control or influence over the management of providers Standards for VET Regulators 2011, standards for VET regulators performing functions under the National Vocational and Training Regulator Act 2011 Standards for VET Accredited Courses 2012, standards for accrediting VET courses Australian Skills Quality Authority instrument fixing fees No.1 of 2011, which relates to setting of fees and recovery of costs, incurred by ASQA, in performing its functions National Standards for ELICOS Providers and Courses (ELICOS Standards), and Education Services for Overseas Students (Designated Authority) Determination 2012 (No. 1). National Vocational Education and Training Regulator (Charges) Act 2012 The National Vocational Education and Training Regulator (Charges) Act 2012 (NVR Charges Act) was introduced into the Australian Parliament on 22 March 2012 and received Royal Assent on 22 July This Act enables ASQA to charge registered training organisations for compliance audits and for the investigation of substantiated complaints. The NVR Charges Act allows ASQA to charge for: compliance audits overseas audits, and substantiated complaints investigations. ASQA commenced charging for compliance audits in November Charging for other activities is yet to commence. Agency overview 9

20 Commissioners Mr Christopher Robinson, Chief Commissioner ASQA s Chief Commissioner also holds the role of Chief Executive Officer. The Chief Commissioner is responsible for: providing the functions outlined in the National Vocational Education and Training Regulator Act 2011, and ensuring the organisation achieves its outcomes and meets other legislative and regulatory requirements. Other responsibilities and accountabilities of the Chief Executive Officer within the Australian Public Sector framework are set out in additional legislation, including the Public Service Act 1999 and the Financial Management and Accountability Act These accountabilities include the management of people, finance, audit and risk, and the procurement of goods and services. Christopher Robinson previously held a number of senior government positions in education, training and related fields, including Chief Executive Officer of the Department of Education and Children s Services, South Australia; Deputy Director-General of the Department of Employment and Training, Queensland; and Managing Director of the National Centre for Vocational Education and Training Research. Mr Robinson has also held numerous senior executive roles in the Department of Prime Minister and Cabinet; in Australian Government departments responsible for education and training; and in the Department of Employment and Training in the United Kingdom. Mr Robinson holds a Bachelor of Agricultural Economics and a Post-Graduate Diploma of Social Sciences. Mr Robinson held the role of Acting Chief Commissioner of ASQA from 1 July 2011, and was appointed as Chief Commissioner and Chief Executive Officer from 1 October 2011 for a period of five years. Dr Dianne Orr, Deputy Chief Commissioner and Commissioner Compliance In addition to the regulatory roles for Commissioners specified in the National Vocational Education and Training Regulator Act 2011, as Commissioner Compliance, Dr Orr leads ASQA s compliance program. This program is delivered through a national network of regional offices located in each capital city. The Commissioner Compliance ensures that: audits of providers are conducted in a systematic and rigorous manner against legislative requirements and standards providers operations are monitored in accordance with the levels of risk determined through ASQA s risk assessment strategy, and auditing is conducted efficiently, professionally, ethically and consistently. 2 As of 1 July 2014, the Public Governance, Performance and Accountability Act 2013 replaced the Financial Management and Accountability Act Australian Skills Quality Authority Annual Report

21 Dr Orr has ten years experience in VET regulation, and has previously held executive and senior policy positions in the Queensland Department of Education and Training ( ) and the Australian National Training Authority ( ). Dr Orr was a member of the National Quality Council, the predecessor to the National Skills Standards Council ( ). She has extensive experience as a teacher and administrator in the VET system. Dr Orr holds a Doctor of Education degree from the Queensland University of Technology and a Master of Educational Studies from the University of Queensland. She is a certified Quality Management System Auditor with RABQSA International and holds a Graduate Certificate in Business Excellence (Evaluation). Dr Orr was appointed to the role of Acting Commissioner from 1 July She was appointed to the role of Commissioner on 1 October 2011 for a period of five years. The Hon Michael Lavarch AO, Commissioner Risk Analysis and Investigation The Commissioner Risk Analysis and Investigation is responsible for overseeing ASQA s risk assessment program. This program enables the identification, analysis and evaluation of the key risks to quality in individual training organisations and in the VET system. The Commissioner has oversight of the industry engagement process, which aims to build ASQA s relationship with industry, regulators and peak bodies to gather information useful to risk assessment. ASQA s investigations, complaints and legal functions also report to the Commissioner. The Hon Michael Lavarch AO has extensive experience in Higher Education and the public policy process. He is a former Dean of the Faculty of Law of the Queensland University of Technology (QUT) and a former Secretary-General of the Law Council of Australia. From 1987 to 1996, Mr Lavarch was a Member of the Australian Parliament and he served as Attorney-General from 1993 to He was made an Officer of the Order of Australia in 2012 for his contribution to the law, education and human rights. Mr Lavarch holds a Bachelor of Law from QUT and was appointed Professor of Law in In 2012, he was awarded the title Emeritus Professor from QUT. Michael Lavarch was appointed Commissioner Risk Analysis and Investigation in February 2012 for a period of five years. He commenced as a Commissioner of ASQA on 16 April Agency overview 11

22 Organisation structure ASQA s national organisational structure is shown in Figure 1. Some of the functions shown below are undertaken in multiple ASQA offices across Australia. Figure 1: ASQA organisational structure as at 30 June Australian Skills Quality Authority Annual Report

23 Outcome and program structure The Portfolio Budget Statements for the Industry, Innovation, Climate Change, Science, Research and Tertiary Education 3 portfolio sets out the planned outcome and program structure for ASQA shown in Table 1. ASQA s performance against this program is outlined in the Report on performance section of this annual report. Table 1: ASQA outcome and program structure Outcome 1: Contribute to a high quality vocational education and training sector, including through streamlined and nationally consistent regulation of training providers and courses, and the communication of advice to the sector on improvements to the quality of vocational education and training. Program 1.1: Regulation and advice Program objective To assure the quality of VET outcomes through national regulation and the communication of advice on vocational education and training. Program 1.1 Deliverables Register training organisations that meet national standards Accredit courses that meet national standards Monitor and enforce compliance Provide advice to and make recommendations to the Portfolio Minister, and/or state and territory Ministers and/or the Ministerial Council on matters relating to VET Collect, analyse, interpret and disseminate information about VET and the performance of RTOs. 3 As of 18 September 2013, this portfolio was renamed; it is now the Industry portfolio. Agency overview 13

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25 Report on performance

26 Performance summary During , ASQA continued to undertake a high volume of its core regulatory work, but also took significant steps in its evolution to a strategic, risk-based approach to regulation. This report on performance focuses on the key advances made by ASQA this year, specifically: completion of an increased number of applications as well as a reduction in average application processing times completion of the first three reviews in the ongoing Strategic Review program development and initial implementation of a new program of VET Regulatory Reform, designed to reduce the burden of regulation on quality providers and course owners, and implementation of an improved process for handling complaints about training providers. Regulation During , ASQA continued to receive and complete a considerable volume of applications relating to registration as a training provider. ASQA received 7619 registration applications and completed processing 8817 such applications. During , ASQA completed 361 applications from organisations seeking initial registration as a new provider, 950 applications to renew provider registration, and 7216 applications to make changes to provider registration. ASQA considerably reduced application processing times this year in particular, for applications to make changes to provider registration, which account for 85 per cent of the applications ASQA receives. Detailed information on applications, audits and compliance begins on page 14 of this report. During , ASQA took action to cancel (25) or suspend (49) the registration of 74 providers. ASQA also gave 188 written notices of intention to cancel or suspend the registration of a provider. In 35 cases, ASQA also imposed another type of administrative sanction, such as placing a condition on a provider s registration. ASQA also undertook its first formal investigations during Since ASQA was established, the main regulatory trigger has been an application from a training provider to either register a new RTO, renew the registration of an existing RTO or to add or remove qualifications from an RTO s scope of registration. Risk was used to assess how each application was processed. Around 90% of the more than 3,200 audits undertaken by ASQA between 1 July 2011 and 30 June 2014 were directly or indirectly triggered by the assessment of an application. These audits resulted in 113 applications to renew an existing RTO s registration being refused. The remaining 10 per cent of audits were triggered by targeted regulation of poor providers based on risk. These audits led to the cancellation or suspension of the registration of a further 130 existing RTOs. In recognition of this, ASQA will move the regulatory trigger from applications to better identify and manage risk. 16 Australian Skills Quality Authority Annual Report

27 Strategic Reviews A major achievement in was the completion of ASQA s first three Strategic Reviews. These reviews identify problematic or high-risk sub-sectors of the training sector, and through research, audit and analysis, develop findings and recommendations. The recommendations of these reviews guide future actions by ASQA as well as proposing actions for other agencies and stakeholders to reduce the risks identified in these training areas. The reviews completed in addressed entry-level safety training for the construction industry; aged and community care training; and marketing and advertising practices in the training sector. ASQA also commenced a second round of Strategic Reviews during These reviews are focused on training related to childcare, security and horse-riding safety. These reviews are scheduled to be completed during The findings of the Strategic Reviews are discussed in detail from page 38 of this report. ASQA s program of VET Regulatory Reform After three years of operation, ASQA has been able to collect substantial data on the performance of providers against the required standards. During , ASQA has used this intelligence to inform its maturing regulatory approach and develop its package of VET Regulatory Reform. The VET Regulatory Reform program which ASQA announced and began implementing from mid seeks to reduce the regulatory burden on high-quality, fully compliant providers, while increasing regulatory scrutiny on poor-quality providers. This regulatory approach also offers increased information and support to those providers who are genuinely attempting to meet the required standards. An overview of the ASQA VET Regulatory Reform projects begins on page 46 of this report. Other key performance developments During , ASQA made a major contribution to the development of clearer, less ambiguous national standards, which will be implemented from 1 January In addition, ASQA has made considerable changes to how it provides information and advice to providers, revising the ASQA website, publishing a series of videos, and making improvements to how the Info line provides advice. An overview of the ways ASQA has engaged with providers and other stakeholders throughout begins on page 48 of this report. Report on performance 17

28 Regulation Objective: Providers and courses meet regulatory requirements. ASQA seeks to ensure the quality of Australia s VET sector by making sure providers and courses meet the required national standards. The national standards set a framework for the delivery of training and assessment by providers to ensure that VET graduates have the skills they need for employment, along with other requirements, for student protection and the provision of accurate and appropriate information to students. ASQA is the regulator of: registered training organisations providers delivering VET courses to overseas students studying in Australia on student visas providers that deliver intensive English language courses to overseas students, and accredited VET courses. The number of RTOs for which ASQA had regulatory responsibility at the end of the , and financial years is shown in Table 2. There has been a slight decrease in RTO numbers across the three years. This is attributable to entry and exit patterns within the RTO market, including as a result of regulatory decisions taken by ASQA to grant registration to new providers, or to refuse renewal applications from existing providers or to cancel/suspend the registration of providers. Table 2: ASQA regulated RTOs , and Date ASQA RTOs % Change increase/decrease 30 June June June ASQA s regulation of RTOs RTOs include technical and further education (TAFE) institutes, adult and community education providers and agricultural colleges, as well as private providers, community organisations, industry skills centres, and commercial and enterprise training providers. ASQA regulates these providers against the VET Quality Framework, which includes the Standards for NVR RTOs To become registered, organisations must demonstrate that they can comply with the requirements of the VET Quality Framework and deliver high-quality training. Once a provider is registered, ASQA applies a risk-based monitoring regime to ensure that they meet the national standards throughout their period of registration. Providers that cannot demonstrate that they comply with the standards face a range of regulatory action, including cancellation of registration. 18 Australian Skills Quality Authority Annual Report

29 ASQA s regulation of CRICOS providers ASQA registers providers delivering VET courses to overseas students studying in Australia on student visas as Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) providers. To deliver VET courses, a CRICOS provider must also be registered as an RTO. In addition to meeting the requirements for RTO registration, CRICOS providers must demonstrate that they comply with additional requirements for delivering courses to overseas students. As at 30 June 2014 ASQA had regulatory responsibility for 493 CRICOS providers. Regulation of ELICOS providers ASQA also regulates some CRICOS providers that deliver English Language Intensive Courses for Overseas Students (ELICOS) to overseas students studying in Australia on student visas. Some of these providers are RTOs, however a provider does not need to be an RTO to offer an ELICOS course ASQA is responsible for the approval and registration of ELICOS providers on CRICOS, except where the ELICOS course is delivered: by the provider in its capacity as a school by the provider in its capacity as a higher education provider, or under an entry arrangement with at least one higher education provider. As at 30 June 2014 ASQA had regulatory responsibility for 86 ELICOS providers that were also an RTO, as well as a further 66 ELICOS providers that were not an RTO. What is a CRICOS provider? Providers registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) can offer courses to overseas students studying in Australia on student visas. Providers delivering courses to overseas students studying in Australia on student visas are required to comply with an additional framework of legislation and standards. The Education Services for Overseas Students (ESOS) framework is designed to ensure that Australia s reputation for delivering quality education services is maintained, and that the interests of overseas students are protected. Applications overview As at 30 June 2014, there were 4664 registered training organisations in Australia; ASQA was the regulator of 3938 of these providers. During , ASQA received 7619 applications relating to registration as a registered training organisation or as a CRICOS provider (see text box). These include applications for initial registration as a training provider as well as applications to add courses, applications to renew registration, and applications to withdraw registration. ASQA completed 8817 applications equivalent to per cent of the applications received. 4 4 Some of the applications completed this year were received during the reporting year. Report on performance 19

30 In the first year of operation ( ), ASQA completed 74.1 per cent of applications received; in , ASQA completed the equivalent of 93.9 per cent of the applications received. Applications received and completed by ASQA in each year since establishment are shown in Figure 2. Figure 2: Applications received and completed by ASQA ( , , ) 10,000 9,000 8,000 7,000 8,611 8,084 7,619 8,817 6,000 5,000 4,873 4,000 3,609 3,000 2,000 1, Registration applications received Registration applications completed Registration applications fall into four categories: applications for initial registration, applications to renew registration, applications to make changes to registration (for example by adding or removing courses from a provider s scope of registration) and applications to withdraw registration. The number of applications received in each of these categories during the reporting year is shown in Figure 3. Figure 3: Applications received, by application type, 1 July June 2014 Applications for initial registration, 212 (3%) Applications to renew registration, 695 (9%) Applications to change scope of registration, 6,456 (85%) Applications to withdraw registration, 256 (3%) 20 Australian Skills Quality Authority Annual Report

31 Key performance indicator Number of initial and renewal applications accepted/rejected ASQA approved 286 applications for initial registration and 862 applications to renew registration during ASQA rejected 44 applications for initial registration as a new provider during and rejected a further 33 applications to renew registration from existing providers. A comparison between and previous years is shown in Figure 4. The numbers of approved and rejected applications for registration both applications to register as a new provider and applications to re-register for all three years of ASQA s operation is shown in Figure 4. Figure 4: Applications for registration approved and rejected by ASQA , , , Initial registration applications approved Initial registration applications rejected Registration renewal applications approved Registration renewal applications rejected Rejected applications During , ASQA completed 361 applications from organisations seeking initial registration as a new provider. Of these, 286 were approved, 44 were rejected, and 31 were withdrawn by the applicant. This means that some 12.2 per cent of applicants did not meet the required standards to become a registered provider. During , ASQA also finalised 950 applications to renew provider registration. Of these, 862 were approved, 33 were rejected, and 55 were withdrawn by the applicant. This means that approximately 3.5 per cent of previously registered providers were not able to meet the required national standards. In addition, ASQA finalised 7216 applications to change provider registration during the reporting year. Of these, 6958 were approved, 103 were rejected, and 155 were withdrawn by the applicant, meaning approximately 1.4 per cent of providers were not able to meet the required national standards. Report on performance 21

32 An analysis of ASQA decisions to reject applications is shown in Table 3, as a percentage of applications completed within each category across ASQA s first three years of operation. Decisions to reject applications (as a percentage of applications completed) in all categories have decreased across each financial year. This trend reflects an improvement by existing and prospective providers to comply with the national standards. Table 3: Decisions to reject applications as a percentage of applications completed, , , Application type % rejected, % rejected, % rejected, Application for initial registration 31.4% 14.9% 12.2% Application to renew registration 12.1% 9.5% 3.5% Application to change scope of registration 3.9% 2.2% 1.4% Ensuring providers meet regulatory requirements audit ASQA finalised 1515 audits of training and ELICOS providers during This represents a significant (11.1 per cent) increase when compared with , during which ASQA finalised 1364 audits. An audit is finalised when a regulatory decision is made by a Commissioner or delegate, or if the audit has been discontinued or is awaiting a decision by an ASQA Commissioner. As at 30 June 2014, ASQA had also either commenced (90) or earmarked (748) a further 838 audits. ASQA undertakes two distinct types of audit registration audits and compliance audits: Registration audits assess whether an application submitted to ASQA complies with the relevant standards. All applications for initial registration as a new provider are audited. Applications to renew registration, or to add courses to a provider s scope of registration, are assessed for risk. Higher risk applications are more likely to lead to a provider being audited. Compliance audits assess providers delivery of quality training and assessment services and outcomes, and may be conducted at any time. (For new providers, a compliance audit is typically scheduled around 12 months after ASQA grants initial registration.) Compliance audits can be triggered by factors such as: a risk assessment information sourced through industry, government, or through an ASQA Strategic Review the receipt of one or more serious complaints against the training provider, or a recommendation by a Compliance Manager. 22 Australian Skills Quality Authority Annual Report

33 During , ASQA finalised some 411 compliance audits (27.1 per cent of finalised audits for the period). This represents an increase of 74.9 per cent over where 235 of these audits were finalised (17.2 per cent of audits completed for the period). ASQA s increasing focus on compliance audits is indicative of the evolving regulatory approach that is discussed throughout this report. As ASQA continues to move from largely transaction-based regulation (where most regulatory action is triggered by an application) to more fully risk-based regulation (where regulation is targeted at high-risk areas) it is expected that this trend toward a greater number and percentage of compliance audits will continue. Key performance indicator High proportion of providers are audited over the registration cycle As at 30 June 2014, approximately 49 per cent of the providers for which AQSA has regulatory responsibility have been the subject to at least one audit activity. Given that ASQA has not yet been in operation for a full registration cycle (i.e. a registration cycle is five years, while ASQA has just completed its third year of operation), it is expected that this figure will increase steadily over the next two years. The outcomes of registration and compliance audits finalised during are shown in Figure 5. Figure 5: Outcomes of all audits finalised 1 July June 2014 Finalised compliant (1,148) Finalised non-compliant (292) Finalised discontinued/awaiting decision (75) Report on performance 23

34 How does ASQA ensure consistency at its audits? ASQA constantly seeks to ensure consistency among its auditors and employs several formal processes to minimise the potential for audit variation, including: Auditor moderation workshops: These are focused on moderating issues that may lead to inconsistency in audit outcomes, and on sharing approaches to overcome these issues. Auditor moderation log: A dynamic record of ASQA s agreed position on compliance issues. Auditors refer to this log when making compliance recommendations. Model Audit Report Content list: To ensure consistency in audit report content, auditors refer to the examples in this list, which focuses on reasons for non-compliance, rectification required, and analysis of rectification evidence. Other processes that contribute to consistent audit processes, including an online auditor discussion board. In , ASQA enhanced the audit moderation program with a range of strategies including: monthly compliance network meetings and discussion of moderation in regional compliance team meetings quality assurance of audit reports including peer review of reports, and an auditor exchange program. ASQA continuously promotes transparency and accountability in its auditing by seeking feedback through quarterly audit surveys. The outcomes of the quarterly audit surveys are discussed in the section of this report about how ASQA engages its stakeholders, beginning on page 56. Ensuring providers meet regulatory requirements regulatory decisions In the financial year, ASQA took regulatory action where necessary to ensure that providers and courses met the relevant requirements. In the period from ASQA s establishment on 1 July 2011 to 30 June 2014, the key trigger for adverse regulatory decisions has been an application. That is, as a result of a provider seeking to add a new course to their scope of registration, or to renew their registration, ASQA has determined that the provider is not meeting the required standards. In response to this non-compliance, ASQA has taken further regulatory action, for example, written directions, conditions or sanctions. During ASQA made 180 decisions to reject applications: 44 initial registration applications were rejected 33 renewal of registration applications were rejected 103 change of registration applications were rejected. This means that ASQA refused 12.2 per cent of applications from organisations seeking to establish a new provider; 3.5 per cent of applications from existing providers seeking to re-register; and 1.4 per cent 24 Australian Skills Quality Authority Annual Report

35 of applications from providers seeking to change the scope of their registration, for example, by adding a new course. ASQA may also take action in relation to a provider as a result of a risk assessment triggered by other data received, for example, a serious complaint. As ASQA continues the move from application-focused regulation to more fully risk-based regulation, ASQA is increasingly implementing targeted (nonapplication based) regulatory action. To date, some 90 per cent of audit activity has been instigated as the result of an application. Key performance indicator Number of RTOs to which written directions, conditions, sanctions, offences or civil penalties were applied During , ASQA made 297 decisions to apply sanctions, cancel or suspend registration, or notify a provider of intention to cancel/suspend registration: 25 decisions to cancel registration 49 decisions to suspend registration 188 written notices of intention to cancel/suspend registration 35 other administrative sanctions. This is an increase of 33 per cent compared with , during which 223 such decisions were made. A detailed comparison of these decisions for the first three years of ASQA s operation is shown in Figure 6. ASQA also commenced its first formal investigations during the reporting year. Several cases are ongoing, and it is likely that offences and civil penalties will begin to be applied in For more information on ASQA s program of investigation and enforcement, refer to page 45. Figure 6: Number of providers to which written directions, conditions, sanctions, offences or civil penalties were applied, by year, , , Decision to suspend registration Decision to cancel registration Notice of intention to cancel or suspend registration Other administrative sanction (e.g. apply conditions to registration) Report on performance 25

36 There was a 33 per cent increase between and in the number of decisions made relating to the cancellation or suspension of provider registration, or to the application of other sanctions. The consistent increase in activity in this area over the past three years reflects both the increased number of applications completed during the reporting year and ASQA s increasing focus on proactively targeting providers that do not meet the required standards (e.g. through targeted compliance audits). Monitoring levels of provider compliance with the standards The levels of provider compliance with each standard (before and after the submission of rectification evidence) are shown in Figure 7. When audited, almost 75 per cent of existing providers were unable to demonstrate compliance with Standard 15. Even after the submission of rectification evidence, 21 per cent of providers remain unable to demonstrate compliance with this Standard. The high level of non-compliance with Standard 15 is a concern for ASQA, as Standard 15 governs training and assessment the core business of a registered training organisation, and the most critical Standard for ensuring the delivery of quality outcomes. Actions being implemented to help providers understand and meet their training and assessment obligations are discussed in the section of this report dealing with ASQA s program of VET Regulatory Reform on page 46. What does each standard address? The Standards shown in Figure 6 address the following aspects of a registered provider s operation: Standard 15 Quality training and assessment Standard 16 Training and student information meeting student needs Standard 17 RTO is responsive to clients and stakeholders Standard 18 Governance Standard 19 Cooperation with regulator Standard 20 Compliance with legislation Standard 21 Insurance Standard 22 Financial arrangements Standard 23 Proper certification Standard 24 Accurate and ethical marketing Standard 25 Transition from superseded courses 26 Australian Skills Quality Authority Annual Report

37 Figure 7: Levels of compliance, by standard, found at audits of existing RTOs, 1 July 2013 to 30 June Standard 15 Standard 16 Standard 17 Standard 18 Standard 19 Standard 20 Standard 21 Standard 22 Standard 23 Standard 24 Standard 25 Percentage of providers compliant when audited Percentage of providers compliant following rectification Provider compliance with the National standards governing training and assessment Levels of provider compliance with each part of Standard 15 (before and after the submission of rectification evidence) are shown in Figure 8. Standard 15 governs the core business of a registered training organisation training and assessment. ASQA has concerns about the low levels of provider compliance with this Standard. Of most concern is that almost 70 per cent of providers are unable to demonstrate compliance with Standard 15.5, which deals with assessment, and 21 per cent of providers remain unable to demonstrate compliance even after the submission of rectification evidence. Actions being implemented by ASQA to address provider non-compliance with Standard 15 include strengthening the information and advice ASQA provides about the Standards. This activity is discussed in the section of this report on ASQA s VET Regulatory Reforms on page 46. What does each part of Standard 15 address? The elements of Standard 15, shown in Figure 8, address the following aspects of a registered training provider s operation: Standard 15.1 Continuous improvement of training and assessment Standard 15.2 Training meets the requirements of the training package Standard 15.3 Required staff, facilities, equipment and materials Standard 15.4 Qualified and competent trainers and assessors Standard 15.5 Assessment is undertaken properly Report on performance 27

38 Figure 8: Levels of compliance with each part of Standard 15, found at audits of existing RTOs, 1 July 2013 to 30 June , Standard 15.1 Standard 15.2 Standard 15.3 Standard 15.4 Standard 15.5 Percentage of providers compliant when audited Percentage of providers compliant following rectification Key performance indicator High levels of provider compliance Over the first three years of operation, ASQA has found that most providers are not fully compliant with all the standards when audited. On average, ASQA has found that 20 per cent of providers are fully compliant with all the national standards at audit. In the remaining 80 per cent of cases, ASQA has found at least one non-compliance. These non-compliances range from minor concerns through to very serious concerns about the quality of training and assessment. If non-compliance is found at audit, the provider has an opportunity of 20 working days to take action to rectify this non-compliance, and to submit evidence of this rectification to ASQA. ASQA will then make a decision about whether the provider is compliant or remains non-compliant. Most providers are able to achieve compliance during the 20-day rectification period. Over the first three years of operation, ASQA has found that, of those providers not fully compliant when audited: 77 per cent are able to achieve full compliance after submitting rectification evidence, and 23 per cent remain not compliant. Actions being implemented by ASQA to address provider non-compliance include developing stronger information and advice for providers seeking to comply with the Standards. ASQA s intelligence-gathering about provider activity over three years of operation has indicated that the majority of providers seek to comply with the Standards, but many struggle to understand and interpret what is expected of them. How ASQA is developing improved information for providers is discussed in the section of this report on ASQA s VET Regulatory Reforms on page Australian Skills Quality Authority Annual Report

39 Ensuring courses meet regulatory requirements While most vocational education and training in Australia is delivered to meet the skill and competency requirements specified in training packages 5, some vocational education and training is also delivered through skills and competencies specified in accredited courses (which fall outside the coverage of training packages). An accredited course must be delivered by a registered training organisation for a graduate to be issued with a nationally recognised qualification. Accredited courses allow providers to meet the training needs of new or changing industry sectors. For a VET course to be accredited by ASQA, the course must comply with the Standards for VET Accredited Courses Course accreditation is formal confirmation that a course: is nationally recognised meets an established industry, enterprise, educational, legislative or community need provides appropriate competency outcomes and a satisfactory basis for assessment meets national quality assurance requirements, and is aligned appropriately to the Australian Qualifications Framework (if the course leads to a qualification). Key performance indicator Number of courses accredited In total, ASQA accredited 130 courses in , including: 69 applications to accredit a new course, and 61 applications to renew the accreditation of a course. There was an increase of 16 per cent between and , in which 112 courses were accredited. Courses accredited since ASQA commenced operation in 2011 are shown in Figure 9. 5 Training packages are developed by Industry Skills Councils to reflect the skills and competencies that employers require from people in different occupations across industries in the economy. Therefore, the framework for the delivery of most VET is set out in training packages. Report on performance 29

40 Figure 9: Courses accredited by ASQA, , , , New courses accredited Courses re-accredited The outcomes of accreditation applications finalised during the reporting period are shown in Figure 10. As in previous years, the majority of applications that ASQA received during to accredit a course were also approved during the year. ASQA approved 69 of the 81 applications to accredit a new course (85 per cent). ASQA approved 61 of the 73 applications to renew accreditation of a course (83.5 per cent). ASQA approved 34 of the 36 applications to amend an accredited course (94.4 per cent). Figure 10: Accreditation applications completed, 1 July June 2014, by outcome of application Initial course accreditation Renewal of course accreditation Amendment to accredited course Approved Rejected Withdrawn 30 Australian Skills Quality Authority Annual Report

41 Accountable and transparent regulation ASQA operates as an open, transparent and accountable regulator and demonstrates this through several formal reporting mechanisms. ASQA reports annually to the Minister for Industry and the COAG Industry and Skills Council. ASQA s performance was examined by the Australian Parliament at Senate estimates committees in October 2013, February 2014, and June ASQA must provide evidence of how it meets the Standards for VET Regulators Key performance indicator ASQA is compliant with national standards The Standards for VET Regulators 2011 describe a series of outcomes that regulators must achieve. ASQA is held accountable to the Standards through external reviews. ASQA s annual report for was tabled in Parliament in October ASQA submitted a report on its compliance with the Standards for VET Regulators 2011 to the National Skills Standards Council (NSSC) in September Broadly, the Standards for VET Regulators 2011 set out several key requirements for VET regulators, including that providers are regulated using a risk-based approach and that ASQA meets the needs of industry, providers and course owners, and the VET sector. ASQA s risk-based approach is discussed throughout this report, with a detailed summary of risk-based regulation beginning on page 36. How ASQA meets the needs of its stakeholders is set out in the responses to ASQA s stakeholder, provider and audit surveys, which are discussed on pages During the reporting period, ASQA also began developing further guidance on the costs and timeframes associated with regulation of providers and courses. Regulatory accountability timely regulatory processes The increased number and percentage of applications completed during reflects a general improvement in efficiency across ASQA this year. ASQA endeavours to process applications in as timely a manner as possible and publishes average application processing times for each type of application on its website. These published timeframes for the completion of an application are based on long-term averages where an applicant has provided a quality, complete application and are based on the applicant being found compliant at audit (where an audit is required). ASQA publishes these average timeframes in order to manage applicants expectations and help providers undertake appropriate business planning. However, in general, the processing time for each application is largely driven by factors relating to the application and applicant. The key factors that influence application processing times include: the type of application (for example, applicants seeking to add high-risk training products or to offer courses offshore are likely to be subject to an audit, increasing application processing time) the quality and completeness of the application (that is, organisations are often given 20 working days to provide outstanding evidence or information), and the particular circumstances, including governance and ownership arrangements, of the organisation submitting the application, can also affect the time taken to complete an application. Report on performance 31

42 Key performance indicator timely regulatory processes For the period 1 July June 2014: Applications to add or remove courses ( change of scope applications) to provider s VET or CRICOS registration are the great majority of applications received by ASQA. During , these accounted for more than 85 per cent of the applications received. ASQA has made significant progress towards refining the assessment process for these applications, and this is reflected in substantially shorter processing times: In , the average elapsed time to complete a change of scope application (VET)* was 17 working days. This represents a 34.6 per cent decrease from the average time taken to complete this application type in which was 26 days. In , the average elapsed time to complete a change of scope application (CRICOS)* was 48 working days. This represents a 17.2 per cent decrease from the average time taken to complete this application type in which was 58 days per cent of all applications were completed within two months of receipt. * an approved application that did not go to audit. Another clear indication of improvement in the timeliness of regulatory processes during the reporting year can be seen in responses to the ASQA Provider Survey Averages of providers ratings of ASQA s timeliness in completing application types where 1.0 is equivalent to very poor and 5.0 is excellent are shown in Figure 11. Note that not all application types are shown for both years; this was the first year that providers were asked about some application types. However, where providers were asked this question in the survey, the results indicate an improvement in provider satisfaction for every application type surveyed. In particular, the average rating of ASQA s timeliness in completing Applications to change scope of RTO registration has improved significantly, from 3.1 in to 4.0 in As change of scope applications make up the great majority (85 per cent) of ASQA s applications received, this is a positive development, and reflects the reduction in the average processing time for these applications (from 26 days to 17 days) discussed above. 32 Australian Skills Quality Authority Annual Report

43 Figure 11: Average provider ratings of The time ASQA took to act on an application, by application type 6 Application for initial VET registration Application to renew CRICOS registration Application for initial CRICOS registration Application to change CRICOS scope of registration Application the renew course accreditation Application for initial course accreditation Application to renew RTO registration Application to change RTO scope of registration Application for initial CRICOS registration ELICOS Average response 2013 provider survey Average response 2014 provider survey Regulatory accountability reasonable costs to regulate the industry In July 2013, ASQA received approval from the then Ministerial Standing Council on Tertiary Education, Skills and Employment (SCOTESE) and the Australian Government to implement a revised schedule of fees and charges. This represented the second stage of a three-stage approach to move to full cost recovery in accordance with a decision made by the Council of Australian Governments (COAG) in December The revised fees and charges took effect from 31 July Since then a decision has been taken not to go ahead with the previously planned third stage of cost recovery. In September 2014, the Australian Government announced that ASQA s fees would not rise further. The fees and charges were developed following consultation on a draft Cost Recovery Impact Statement (CRIS) during The consultation involved meetings with peak bodies in the training sector as well as an online request for submissions. As part of the approval process, the Department of Finance and Deregulation confirmed that ASQA s CRIS complied with the Australian Government s Cost Recovery Guidelines =very poor and 5.0=excellent from ASQA provider survey 2014 (n=2255) Report on performance 33

44 ASQA s fees and charges provider viewpoints As part of the review of ASQA s processes conducted by PricewaterhouseCoopers, discussed in detail on page 77, 356 providers were surveyed about their perception of ASQA s application fees. 63 per cent considered the fees for initial registration appropriate 45 per cent considered the fees for renewal of registration appropriate 52 per cent considered the fees for change of scope appropriate. Key performance indicator Reasonable cost to regulate the industry ASQA s operating costs in perspective The Department of Industry has calculated that the operating revenues of the total VET sector would be in the order of $10.6 billion. As such, the cost of ASQA performing its regulatory role amounts to approximately 0.3 per cent of the estimated total economic value of the sector. The Australian Government s decision not to move to full cost recovery represents a major decision to reduce the cost of regulation to RTOs and ELICOS providers. 34 Australian Skills Quality Authority Annual Report

45 Proportionate, risk-based regulation

46 Objective: Decisive and proportionate action is taken to regulate the industry ASQA meets this objective through the application of a proportionate and risk-based approach to regulation. For ASQA, proportionate means that regulatory focus is concentrated on providers of concern (those that are not delivering quality training outcomes). Similarly, regulatory interventions are minimised for providers that consistently deliver high-quality training outcomes. Risk-based regulation means targeting resources to areas that pose the greatest risk to the delivery of quality vocational education and training and therefore the greatest risk to the reputation and economic wellbeing of Australia s training and international education and industries. This approach also means that for high-quality providers, the burden of regulation can be minimised. ASQA implements this proportionate and risk-focused regulation through several key methods: the application of an agency-wide risk model, that utilises data and intelligence to identify, evaluate and treat risks, and influences every aspect of the regulation of providers, from application to audit to enforcement identifying and addressing major systemic risks through a program of Strategic Reviews, targeted at problematic sub-sectors of the training industry using complaints about regulated providers as a key source to gather data and inform how those providers are regulated. In addition, ASQA commenced its first formal investigations during ASQA applied enforcement powers under the National Vocational Education and Training Regulator Act 2011 and the Education Services for Overseas Students Act 2000 (ESOS Act) to investigate serious allegations about ten providers during Risk assessment and risk model ASQA uses risk management as an integral part of its framework for regulation. In practice this means that ASQA primarily focuses its efforts on assessing and responding to the risks that may arise if a learner is judged competent without possessing the necessary skills and knowledge. ASQA-regulated providers are assigned a risk rating as an indicator of the level of risk they present, based on known data and regulatory history. A rating informs ASQA about how much regulatory scrutiny it needs to commit to the provider to ensure compliance is maintained and that quality outcomes are delivered. ASQA also applies a risk-based approach when responding to complaints about providers. ASQA assesses risks to the training and international education system and mitigates heightened risk exposures through targeted action, including a program of strategic reviews focusing on high-risk sub-sections of the sector. 36 Australian Skills Quality Authority Annual Report

47 Understanding the current ASQA risk model When assigning risk ratings, for each provider, ASQA considers: Likelihood factors, which assess How likely is it that the provider will deliver poor quality education or training? Impact factors, which assess What is the potential impact of this poor-quality training on students, industry, the economy, and the reputation of Australia s training and international education system? Factors that contribute to the assigning of risk ratings are shown in Table 4. Table 4: Risk factors under the ASQA risk model in use as at 30 June 2014 Performance risk factors These factors include: substantiated complaints compliance with data provision requirements non-compliance recorded at audit, and published regulatory decisions. Governance and profile risk factors These factors include: delivery to overseas students length of continuous registration, and level of recent scope of registration changes. Review of the ASQA risk model During , ASQA commenced work on a major review of its risk model. As part of initiatives to improve regulation of the national standards, ASQA s emerging risk model will be more proactive than previous models. ASQA will use data and market intelligence to direct regulatory effort, as opposed to responding to applications for permission. Environmental scans will be an important tool to predict potential risks due to changes in market needs, public policy and funding settings, shifts in student behaviour, and critically, the experience of employers in gaining competent staff after training. Proportionate, risk-based regulation 37

48 Key performance indicator Number of providers subject to high risk monitoring ASQA collates and analyses data about providers to assign each with a high, medium or low risk rating as an indicator of the risk it presents of not complying with its legislative obligations. A rating is assigned only when ASQA has access to sufficient performance data about the provider, usually following completion of a post-initial registration audit conducted months following initial registration. At 30 June 2014 ASQA had applied risk ratings to the RTOs for which it had regulatory responsibility as follows: High 9.4 per cent Medium 23.3 per cent Low 56.5 per cent Not yet assigned 10.8 per cent. If a provider is considered high risk, ASQA is more likely to engage in regulatory action including: compliance auditing (a supplementary risk profile identifies the standards or industries that should be the focus of the audit) applying conditions on registration, which may prohibit delivery in defined contexts requiring additional delivery activity data reporting or other data reporting imposing sanctions, such as written directions or suspension of all or part of a provider s registration, or disclosing information about the provider to other agencies (for example, the Department of Immigration and Border Protection). A risk rating also informs the frequency of any such action. For instance, a provider rated as a higher risk may be scheduled for more frequent compliance auditing, at its expense, than a provider rated as lower risk. Strategic reviews A key part of ASQA s regulatory approach is to undertake strategic industry reviews involving in-depth analysis of a particular issue, sector, qualification or method of delivery when a risk has been identified to the quality of training and assessment. The focus is on examining systemic poor practice and identifying appropriate actions to address the poor practice across the system. Three reviews were finalised at the end of 2013: Training for the White Card for Australia s construction industry; Training for aged and community care in Australia and Marketing and advertising practices of Australia s registered training organisations. The findings of the three reviews led to 24 recommendations in total, many of which have been fully implemented, while ASQA is working with stakeholders to implement the others. The full reports from all three strategic reviews are available on ASQA s website. 38 Australian Skills Quality Authority Annual Report

49 Training for aged and community care in Australia ASQA initiated this review in November 2012 in response to the Productivity Commission s 2011 report, Caring for older Australians. The review relied on audits of registered training organisations, surveys of registered training organisations, and stakeholder feedback for its findings. Key findings of the review include: Aged and community care training programs are largely too short and include insufficient time in a workplace for satisfactory skills development. RTOs delivering high-quality training programs face unfair competition from those RTOs offering cheap and unrealistically short training programs. Most RTOs offering aged care and community care training were not fully compliant at the initial audit, with 87.7 per cent not complying with at least one of the national training standards. However, the level of non-compliance fell to only 20 per cent after providers were given an opportunity to address the identified non-compliances. RTO leadership and staff had a poor knowledge and understanding of the required national standards, and of the requirements of training packages (which form a core element of these national standards). Most RTOs offering aged and community care training struggle with appropriate assessment. Up to 80 per cent of RTOs had compliance issues with assessment at the initial audit. The review made ten recommendations. ASQA is progressively implementing these recommendations, including by: Closely monitoring aged and community care qualifications When ASQA audits a provider offering aged and community care training and assessment, these qualifications are always included in the sample of qualifications to be audited. Advocating for appropriate changes to standards ASQA made a recommendation to the review of the national standards for RTOs, asking that the revised standards include explicit definitions of the principles of assessment and the rules of evidence. (This recommendation had been incorporated into the draft standards that were released for feedback by the VET Reform Taskforce in June 2014). Working with other stakeholders At the time of reporting, the Community Services and Health Industry Skills Council (CSHISC) was reviewing the unit CHCCS305C Assist clients with medication, with the intention of including changes recommended in the Strategic Review report. Training for the White Card for Australia s construction industry ASQA initiated the Training for the White Card for Australia s construction industry review in November 2012 in response to persistent stakeholder concerns about the quality of training in the unit of competency CPCCOHS1001A Work safely in the construction industry, also known as the White Card. This is a mandatory entry-level unit for people seeking to work on construction sites in Australia. Concerns raised by industry indicated that people issued with White Cards may not actually have achieved the introductory knowledge and skills to work safely on construction sites. Industry concerns included: inadequate assessment programs that are too short for trainees to obtain the required competencies, and the potential for identity fraud in online training. Proportionate, risk-based regulation 39

50 In this review, ASQA sought the views of stakeholders including employers, unions, work health and safety regulators; and RTOs. ASQA analysed the scale and nature of White Card delivery through a survey of RTOs, and the quality of delivery and assessment through audits of RTOs delivering the unit. Key findings of the review include: Industry has lost confidence in White Card s value to assure workplace safety assurance for new entrants to the construction industry. Some delivery of the White Card takes as little as 30 minutes, and the great majority of White Cards (95 per cent) are delivered online. None of the online-delivery RTOs audited for this review were adequately assuring the identity of students. Some 75 per cent of White Card training providers were not compliant with the standard relating to assessment practices at audit, non-compliance fell to 27 per cent however after providers were given an opportunity to address the identified non-compliances. There is great variety in state requirements for work health and safety regulation. A more consistent national approach to work health and safety regulation in terms of General Construction Induction training is required. The review made six recommendations related to ASQA s regulatory functions. ASQA is progressively implementing these recommendations, including by: Closely monitoring the delivery of the White Card by ASQA-registered RTOs Since November 2013, when auditing any provider offering the unit CPCCOHS1001A Work safely in the construction industry, ASQA has included that unit in the scope of the audit. Advocating for appropriate changes to standards ASQA made a recommendation to the review of the national standards for RTOs, asking that the revised standards include explicit definitions of the principles of assessment and the rules of evidence. (This recommendation had been incorporated into the draft standards that were released for feedback by the VET Reform Taskforce in June 2014). Considering further action relating to validation of student identity at the time of reporting. Working with other stakeholders the Construction and Property Services Industry Skills Council had commenced discussions around redeveloping the White Card unit to more clearly specify evidence requirements at the time of reporting. Marketing and advertising practices of Australia s registered training organisations ASQA initiated a review into the marketing and advertising practices of Australia s RTOs in December The review was developed in response to serious and persistent concerns raised by the training sector about RTOs and other bodies providing misleading marketing and advertising. The review assessed the websites of 480 organisations marketing and advertising services. Of these websites, 421 belonged to registered training organisations and 59 to unregistered training organisations. 40 Australian Skills Quality Authority Annual Report

51 Key findings of the review include: Consumers (including students and employers) are often provided with ambiguous information, or insufficient information to make informed training choices. Up to 45 per cent of the RTOs were marketing and advertising misleading information. 12 per cent of RTOs surveyed were marketing superseded courses. Nearly 9 per cent of RTOs were engaged in deceptive marketing by promising jobs and/or training outcomes ahead of any assessment. The review s key recommendations include: that ASQA prioritise RTOs marketing and advertising in its regulation that ASQA undertake periodic random sampling of websites to identify potential non-compliance with the standards, and conduct national workshops to reinforce and explain to registered training organisations the requirements of the standards that the standards relating to marketing and advertising are enhanced that the standards-setting body and VET regulators work together to address volume of learning concerns identified in the strategic review, and that measures to ensure the protection of consumers using VET brokers are considered. The review made eight recommendations. At the time of reporting, ASQA had begun implementing several of these recommendations: Close inspection of training organisations websites ASQA reviews an RTO s website whenever that RTO submits an application. If any issues are identified, ASQA contacts the RTO and asks it to fix the problem. If identified problems are not resolved, the provider s application is not progressed and the provider may be subject to an audit. Advocating for appropriate changes to the standards ASQA made recommendations to the review of the national standards for RTOs relating to the inclusion of explicit requirements for providers marketing and advertising, and for providers delivering training with third parties. (These recommendations had been incorporated into the draft standards that were released for feedback by the VET Reform Taskforce in June 2014). Strengthening information and guidance about providers marketing and advertising obligations ASQA has made a commitment to provide additional information and guidance for providers about the revised national standards. This includes providing specific information through the website and information sessions in late 2014 about any marketing and advertising requirements that may be included in the revised standards. Strategic reviews in progress as at 30 June 2014 After consulting the Minister for Industry, ASQA s Commissioners decided that the three areas to be reviewed in 2014 would be training for: childcare and early childhood learning the security industry, and horse riding. Proportionate, risk-based regulation 41

52 ASQA selected childcare and early childhood training in response to the recommendations of the Productivity Commission s 2011 Early Childhood Development Workforce report. Training in the security industry had been an ongoing concern raised with ASQA (including through coroner s reports). A NSW coroner s report recommended a review of horse-riding training. The three reviews are underway and are scheduled to be completed during Addressing potential risks in asbestos removal training In November 2013, in response to emerging information about risks with the National Broadband Network (NBN) rollout in Tasmania, ASQA Commissioners decided to conduct a review of all providers delivering two units of competency relating to the removal of asbestos. The review was prompted by a change in the asbestos-removal licencing requirements. This licensing change led to contractors requiring retraining. ASQA found that some providers were delivering the training in one to one and a half days, which indicated that these providers were potentially not meeting the training package requirements. ASQA contacted thirty-one providers who were registered to deliver: CPCCDE3014A Remove non-friable asbestos CPCCDE3015A Remove friable asbestos. These providers were asked to show evidence to confirm compliance with several of the national standards relating to training and assessment, as well as the standard governing the accuracy and integrity of providers marketing and advertising. As a result of the review, four providers were assessed as compliant. (One provider advised they didn t deliver the units and therefore withdrew them from scope.) Twenty-six providers were assessed as noncompliant and given 20 working days to submit rectification evidence. Of these providers: 18 were assessed as compliant following rectification three providers withdrew the units from their scope of registration to rectify the non-compliance, and five providers were issued with an intention to give a written direction. The outcome of the review emphasises the importance of this type of risk-focused, data-driven regulatory activity. ASQA found that, in the majority of cases, assessments were not being conducted in accordance with the unit of competency requirements. A number of providers were not conducting direct observations of tasks in real or appropriate simulated work conditions and only six providers had compliant assessment tools. In addition, it was identified that the trainers and assessors were not meeting the minimum vocational competency requirements of the training package and only six of the providers complied with the trainer/assessor requirements. Collecting complaints data to inform risk-based decision making ASQA accepts complaints about training providers from students, their representatives, and other members of the community. ASQA s complaints-handling role has a specific purpose ASQA investigates complaints and uses information gathered through complaints to inform its risk assessments of providers and applications, and therefore, to inform how those providers are regulated. 42 Australian Skills Quality Authority Annual Report

53 When ASQA accepts a complaint, the ASQA Complaints Team reviews the information provided and conducts a risk assessment. ASQA may then: use the information provided in the complaint to inform future regulatory activity contact the provider to request a specific action, and/or undertake a formal investigation (in the most serious cases). The outcomes of a formal investigation can include: a compliance audit of a provider s registration, which may lead to a decision to suspend, cancel or place conditions on a provider s registration. In , ASQA received 1398 complaints about training organisations. Approximately 40 per cent of complaints received by ASQA were from students; 25 per cent were from employees, former employees, other RTOs or industry stakeholders; and 16 per cent of complaints were from government authorities. ASQA finalised 846 complaints during The outcomes of complaints finalised during are shown in Figure 12. In , ASQA finalised 563 complaints. This 50 per cent increase in the number of complaints finalised can be largely attributed to the introduction of an improved, risk-focused complaints system during (refer to page 45). What types of action does ASQA take in response to complaints? Listed below are examples of how ASQA responded to complaints about training providers during the reporting year: An industry body raised serious allegations about the delivery and assessment of a number of qualifications. As a result, ASQA conducted a compliance monitoring audit of the provider, which identified significant non-compliance. The provider was notified of the areas of non-compliance and given an opportunity to provide rectification evidence to ASQA within a specified period. The process is ongoing. ASQA received a complaint regarding misleading marketing on an organisation s website (in which the organisation was claiming to provide nationally recognised training but was not a registered training provider). ASQA directed the organisation to amend its marketing and remove any reference to such training. The organisation complied with the request. ASQA received a complaint regarding a registered training organisation providing courses to overseas students. The complaint alleged that students were not attending and that the provider was failing to report them for non-attendance as required. Such non-attendance is a breach of the conditions of an overseas student visa. This complaint led to an unannounced audit, which identified significant non-compliance. The provider was notified of the areas of non-compliance and given an opportunity to provide rectification evidence to ASQA within a specified period. Following review of the evidence the provider continued to demonstrate critical non-compliance and was given notice of intention to cancel its registration. Should the provider not respond to the intention to cancel, the Commissioners will issue a notice to cancel. The provider will then have an opportunity to appeal that decision at the Administrative Appeals Tribunal. Proportionate, risk-based regulation 43

54 The outcomes of complaints finalised during the reporting period are shown in Figure 12. If a complaint is substantiated, ASQA requires rectification of the issues raised in that complaint, or takes other appropriate action in relation to the provider. Where the outcome of a complaint is Information will inform future regulatory activity, this means that the data gathered through the complaint may inform a provider s risk rating; be added to a provider s record; or be noted for possible consideration at the provider s next audit. Where a complaint is partially substantiated, ASQA may require the organisation to rectify some of the issues raised in the complaint. If a complaint is identified as being outside ASQA s jurisdiction, ASQA will refer the complainant to the appropriate body. Figure 12: Outcomes of complaints finalised by ASQA 1 July June 2014 Investigated and found not to be substantiated (127) Complaint substantiated (83) Information will inform future regularity activity (430) Identified as not in ASQA s jurisdiction and complainant referred to appropriate body (128) Partially substantiated (46) ASQA categorises the issues raised within each complaint received about a provider. The five most frequently raised issues raised in complaints about training providers during the reporting period are shown in Figure 13. Figure 13: Issues most frequently raised in complaints about training providers, 1 July June 2014 Poor quality training cited in 27% of complaints Poor assessment methods cited in 19% of complaints False or misleading marketing cited in 17% of complaints Alleged fraud or criminal activity cited in 8% of complaints Student not issued with certification cited in 8% of complaints 0% 5% 10% 15% 20% 25% 30% 44 Australian Skills Quality Authority Annual Report

55 The frequency with which complainants raised concerns about the fundamentals of training and assessment reflects ASQA s findings in relation to levels of compliance with Standard 15, discussed on page 26 of this report. False or misleading marketing was also an issue raised by many complainants (raised in 17 per cent of complaints). ASQA has taken substantial action to address concerns with marketing and advertising in , including through beginning to implement the recommendations of the Strategic Review report into providers marketing and advertising practices. ASQA contacts training organisations when misleading advertising has been identified, and requests that it is rectified or that ASQA is provided with an explanation. The RTO is given a week to rectify the problem. If the provider has submitted an application, the application is not progressed until the problem has been resolved. If the issue is not resolved, then the application is forwarded to ASQA s Compliance Group for audit. Using data to assess risk changes to ASQA s complaintshandling process in In the financial year there was an 11 per cent increase, compared to , in the number of complaints received by ASQA about registered training organisations and other providers. The complaints process can be highly resource-intensive, often raising complex issues (such as matters of jurisdiction) and high stakeholder expectations. To meet these challenges and expectations, ASQA has undertaken significant work to improve its complaints handling processes and procedures during , including: Developing a risk-based Complaints Management Framework that helps ASQA consistently and efficiently process complaints. The Complaints Team use this framework to prioritise complaints (based on time and resource constraints) and address complaints in a way that is commensurate with risk. The complaints section of the ASQA website has also been reviewed and updated to provide more comprehensive information to complainants about ASQA s policy and jurisdiction in relation to complaints. By providing more detailed information for complainants, the revised website aims to reduce the number of out-of-scope complaints ASQA receives and better manage complainant expectations. Consistent with a risk-based approach, greater priority and resources are allocated to those complaints which indicate greatest potential risk to the achievement of high-quality vocational education and training. Investigation and enforcement decisive action to address non-compliance In ASQA commenced its first formal investigations in accordance with the National Vocational Education and Training Regulator Act 2011 (NVR Act), the Education Services for Overseas Students Act 2000 (ESOS Act), and the Australian Government Investigation Standards. ASQA has enforcement powers under both the NVR Act and the ESOS Act to investigate serious allegations. If sufficient evidence is established to prove that the person or the company has committed an offence, then they may be prosecuted. Proportionate, risk-based regulation 45

56 During , ASQA s primary focus was on: building the capacity of the five members of the investigations team appointing authorised officers, and establishing processes to work with the Commonwealth Director of Public Prosecutions (CDPP) and the Australian Government Solicitor (AGS) on criminal and civil prosecutions. During , ASQA investigated ten cases: One case was referred to and accepted by the CDPP. The CDPP has indicated the case is likely to be prosecuted in Three cases were referred to the AGS for advice on civil pecuniary penalty action, with the status of each case at the time of reporting being: One case resulted in the AGS being instructed to bring a civil pecuniary penalty action against a company that issued qualifications when it was not a registered training organisation One case was discontinued as the evidence demonstrated that there was no case to answer One case is still under consideration and awaiting further advice from the AGS. ASQA s program of VET Regulatory Reform making it easier for high-quality providers to meet their obligations In October 2013, ASQA began developing a range of reforms to the way it carries out its regulatory functions. The fundamental driver for these reforms is ASQA s goal of making it easier for high-performing providers to meet their obligation to deliver quality training and assessment, while increasing scrutiny on providers who do not provide quality training. In addition, the reforms support the Australian Government s broader deregulation agenda. In the first three years of national VET regulation, three distinct groups have emerged in the Australian VET sector: high quality providers who fully comply with the required national standards providers who want to comply with the national standards but who experience some difficulties when audited, and providers who do not provide quality training and are unwilling or unable to comply with the standards. Informed by the outcomes from its first three years of regulation, ASQA has developed an evolved regulatory approach that reduces the regulatory burden on high-quality, fully compliant providers, whilst undertaking more rigorous regulation of seriously non-compliant, poor-quality providers. The VET Regulatory Reform agenda supports this approach by: Streamlining processes ASQA has streamlined the registration renewal process by removing the requirement for existing providers to undergo a financial viability assessment as a mandatory part of the renewal process. At the end of , ASQA also implemented a new process to automatically update providers scope of registration when equivalent training package products are released without unnecessary applications and fees. 46 Australian Skills Quality Authority Annual Report

57 Improving the information and guidance ASQA delivers to providers ASQA is also seeking to provide a greater level of support to that group of providers that seek to deliver quality training but experience some difficulties (perhaps as a result of trouble understanding the requirements of the standards). This includes a commitment to provide information and guidance on the revised national standards. ASQA began development work on the projects to implement this reform in October 2013, and the first aspects of this reform were announced to the sector on 25 June Implementation of these projects began on 1 July Proportionate, risk-based regulation 47

58 Stakeholder relationships Objectives: Students, employers, industry, governments and the community have full confidence in the quality of Australia s vocational education and training and ELICOS providers. and Students, employers, industry, governments and the community have full confidence in ASQA s regulatory work in contributing to the quality of Australia s vocational education and training and ELICOS providers. Developing meaningful and constructive relationships with its stakeholders is a key focus for ASQA. ASQA has a wide variety of stakeholders, all of whom have an interest in ensuring appropriate regulation and continued confidence in the VET sector in Australia. These stakeholders include federal, state and territory government departments responsible for training, peak training industry groups, business and employer groups and other VET sector and industry regulators. Through this engagement, ASQA is able to gather data and intelligence and identify trends and issues in the VET sector and work with its stakeholders to address them. Key performance indicator High levels of stakeholder satisfaction with the quality of the VET system The NCVER Student Outcomes Survey 2013 is an annual survey of students (in the publicly funded sector only) who completed their VET during In 2013, 87.3 per cent of graduates were satisfied with the overall quality of their training. The NCVER Employers use and views of the VET system 2013 provides information on employers use and views of the vocational education and training (VET) system. In 2013, 83.1 per cent of employers were satisfied with nationally recognised training. Commissioner engagement with stakeholders ASQA s Commissioners engage with its stakeholders in a variety of ways. As and when required the Commissioners meet with federal, state and territory government ministers and the senior officials from government departments responsible for training to discuss ASQA s regulatory activity and responses to issues in the sector. The Commissioners also meet with peak training industry bodies and peak industry and employer groups to discuss ASQA s regulatory activity as well as seek their feedback about the VET sector. Such engagement not only raises awareness of ASQA s activities but also serves to enhance the quality of the sector through shared information and intelligence. Provider roundtables ASQA held quarterly provider roundtable meetings during These meetings provided opportunities for peak bodies to engage with ASQA and discuss ASQA s ongoing regulatory approach, as well as high-priority emerging issues. 48 Australian Skills Quality Authority Annual Report

59 ASQA views the provider roundtables as a valuable forum, providing an opportunity for structured dialogue with provider organisations. Provider organisations are able to bring the concerns of their memberships to ASQA s attention. The forums have helped ASQA better understand the concerns of the regulated community, and the insights gained have led to improvements in ASQA s regulatory approach and outcomes. ELICOS Regulator Provider Forum ASQA has established a Regulator Provider Forum with English Australia (the national peak body for the English language sector of international education in Australia) and the Tertiary Education Quality and Standards Agency (TEQSA). In this forum met twice to discuss issues relating to the regulation of English Language Intensive Courses for Overseas Students. Commissioner engagements ASQA Commissioners presented at a range of industry events during Key forums and conferences that the Commissioners attended are listed below. Senior ASQA employees also presented at numerous industry and provider events throughout the year. Christopher Robinson, Chief Commissioner Australian Council for Private Education and Training (ACPET) 2013 National Conference, Adelaide, 30 August 2013 TAFE Directors Australia (TDA) National Conference, Brisbane, 2 September 2013 ASQA/Skills Tasmania forum, Devonport, Launceston, Hobart, 10 September 12 September 2013 National Velg Conference, Melbourne, 19 September 2013 Victorian TAFE Governance and Regulation forum, Melbourne, 29 November 2013 ASQA and Department of Further Education, Employment, Science and Technology (South Australia) forum 2014, Adelaide, 6 February 2014 New South Wales Private VET Provider forum, Sydney, 27 March 2014 ACPET and Australian Chamber of Commerce and Industry (ACCI) National Skills Summit, Canberra, 25 June Dianne Orr, Deputy Chief Commissioner and Commissioner-Compliance AUSTAFE 2013 National Conference, Gold Coast, 11 October 2013 Community Colleges Australia Conference 2013, Sydney, 14 November 2013 Northern Territory provider information sessions, Darwin and Alice Springs, November 2013 Victorian TAFE International, Melbourne, 27 March 2014 Innovation & Business Skills Australia (IBSA) VET Practitioners Conference, Melbourne, 7 May 2014 Skills Tasmania Conference, Hobart, 3 June Proportionate, risk-based regulation 49

60 Michael Lavarch, Commissioner-Risk Analysis and Investigation Council of International Students Australia National Education, Sydney, 9 July 2013 Australia-India Industry Skills Council-Sector Skills Council workshop and roundtable, Sydney, 11 July 2013 TDA/Chinese delegation (Guangdong Province), Sydney, 13 November 2013 TDA Vocational Education Leadership Training program/chinese delegation, Sydney, 19 November 2013 Skills Services Australia National Conference, Sydney, 4 March 2014 National English Language Teaching Accreditation Scheme (NEAS) 2014 English Language Teaching (ELT) Management Conference, Sydney, 8 May Online communications ASQA primarily uses online communication channels to help providers, course owners and stakeholders stay up-to-date with VET sector developments and regulatory processes. In , ASQA s newsletter was sent to more than 19,500 subscribers, including to all ASQA-registered providers. ASQA also sent news alerts to providers when significant developments occurred (for example, as the first of the ASQA VET Regulatory Reform projects were implemented in June 2013). During , ASQA redeveloped its website and conducted user testing with RTO representatives to ensure the revised site would meet user needs. The new site was launched on 1 July 2014 and included: a new, single help centre and a range of materials including videos to help RTOs better understand their obligations more information for providers delivering to overseas students, and enhanced functionality and search capabilities. In there were: More than 299,000 visitors to ASQA s website (an increase of 16 per cent), and More than 1.9 million page views across the site as a whole. Service delivery During , the ASQA Info line continued to provide an important service to ASQA registered providers and other stakeholders. The Info line provides information on a wide range of issues (within ASQA s scope of operation) and is staffed by customer service employees trained to maintain current knowledge in ASQA s processes and the VET regulatory system. The Info line has access to internal provider records and frequently liaises with ASQA s risk and compliance teams to obtain information about specific provider issues. The Info line responded to 37,651 calls and 11,961 s in This represents a slight decrease in the total number of enquiries (49,612) when compared to , in which there were 58,750 enquiries in total. This reduction could be attributed to the service improvement as discussed on the following page. Most simple enquiries are responded to within two business days. The Info line also provides information to ASQA regarding emerging trends in enquiries, to assist in developing information materials. 50 Australian Skills Quality Authority Annual Report

61 The Info line team works to continually refine and improve the service provided by the Info line. This includes reviewing Info line scripts, implementing formal training and staff mentoring and a call quality monitoring program. ASQA implemented the following initiatives in to contribute to ASQA s objective of continually improving stakeholder relationships: Increased personalisation of information delivery: by providing specific contact points for service users, and working to reduce the use of technical jargon wherever possible. Improving the quality of responses (both phone and ): to ensure service delivery staff are always providing high-quality responses, this year the team implemented regular training sessions, individual learning and development time and technical updates to ensure the provision of more specific answers to enquiries. Increased focus on customer service: ASQA provided enhanced training to ensure Info line staff have a greater understanding of each caller s enquiry as well as the necessary skills to tailor the answer to each caller. Transferring calls to regulatory staff: In certain cases, where an enquiry relates directly to a submitted application or a request for more information from a regulatory staff member, Info line staff may transfer calls to regulatory staff, allowing callers to receive tailored and specific information regarding their particular circumstance rather than a generic response. ASQA also has a dedicated line for calls relating to ELICOS. Providers delivering these courses have a specific set of requirements and concerns; a dedicated line for these calls allows ELICOS provider concerns to be resolved quickly and effectively. Industry engagement Through the Industry Engagement team, ASQA works collaboratively with regulators and industry representative bodies to ensure student, employer, and government confidence in the outcomes delivered by Australian RTOs. The Industry Engagement team establishes and maintains mutually beneficial relationships with industry bodies, in order to identify and mitigate risks to the quality of Australia s VET sector. ASQA Industry Engagement stakeholders include: Industry Skills Councils industry regulators and licensing bodies peak industry and employer groups other government agencies (such as the Department of Industry), and industry associations. During the reporting period, the Industry Engagement team liaised with 129 organisations on 705 issues. The team engaged with Industry Skills Councils on 293 issues (an increase of 25 per cent from ). Liaison with Industry Skills Councils focused on: issues arising from training package transition activity, and facilitation of four Industry Skills Council training package information sessions, which provided professional development to ASQA compliance staff. Proportionate, risk-based regulation 51

62 The team engaged with 61 industry regulators on 305 issues, and with 27 industry associations on 50 issues. Discussion with regulators and industry associations this year focused on issues in the following sectors: transport, postal and warehousing mining health care and social assistance public administration and safety electricity, gas, water and waste construction. Industry Engagement works with industry regulators to ensure that ASQA has access to relevant technical advice and subject matter expertise. These arrangements are articulated within the Memoranda of Understanding (MoUs) which ASQA has with relevant stakeholders. During this financial year five additional MoUs were finalised by Industry Engagement. Additional technical advice for audit was arranged on three occasions during the year. Stakeholder and provider surveys ASQA seeks to be accountable and transparent in its operations as a regulator. As such, ASQA values feedback, which helps it to evaluate the effectiveness of its regulatory approach and address the relevant concerns of providers and stakeholders. In , ASQA sought this feedback formally through major surveys of its providers and key stakeholder organisations. Feedback from providers about their audit experience is also sought directly through the quarterly audit survey, discussed on page 56. The surveys were designed to measure ASQA s performance against its Strategic Plan and Operational Plan , organisational values, and performance requirements under the National Vocational Education and Training Regulator Act Participation in the surveys was optional and responses were confidential. Both the surveys covered topics including: the quality of service provided by ASQA employees the quality of information ASQA publishes, and ASQA s consultation and communication practices. In addition, stakeholders were asked questions about regulatory decisions and the Strategic Review program, while providers were asked about their interactions with ASQA during the application process. All providers registered with ASQA at 30 June 2014 were invited to participate. ASQA received feedback from 2255 providers (63 per cent of those invited). This is the third year in which ASQA has surveyed VET sector stakeholders, and the second year in which RTOs and other training providers have been surveyed. ASQA is now able to compare the responses from each year to identify trends. As ASQA has matured as an organisation, respondents perception of ASQA s performance has improved. 52 Australian Skills Quality Authority Annual Report

63 Survey outcomes stakeholder respondents Key performance indicator High levels of stakeholder satisfaction with ASQA s regulatory work Key performance indicator Stakeholder perception of ASQA s performance of its statutory functions The Survey of VET sector stakeholders showed that their satisfaction with ASQA s regulatory work and perception of ASQA s performance of its statutory function remained generally positive. Stakeholders continued to show high levels of satisfaction with ASQA s communication channels (website, Info line, fact sheets) and ASQA s employees. A number of areas of ASQA s operations recorded slight decreases in satisfaction in , indicating that ASQA needs to improve communication about certain aspects of its regulatory activities. A detailed breakdown of stakeholder survey responses, across the previous three years, is shown in Figure 14. Proportionate, risk-based regulation 53

64 Figure 14: Average stakeholder responses to ASQA stakeholder surveys 2012, 2013 and = very poor and 5.0 = excellent 54 Australian Skills Quality Authority Annual Report

65 Survey outcomes provider respondents ASQA invited all providers registered as at 30 June 2014 to respond to the 2014 provider survey. There were 2255 respondents, an eight per cent decrease compared to the 2013 survey. A summary of results and a comparison with the results of the 2013 survey is shown in Figure 15. In 2014, providers were also asked about application processing times for each application type. The results in this area indicate improvement across all categories. (Providers responses are detailed in the section of this report Regulatory accountability timely regulatory processes on page 31.) The full results of the survey are also available on the ASQA website. Overall, the survey results show that providers perceptions of ASQA s performance improved in , compared to In all but two survey questions, providers satisfaction ratings improved; in the remaining two questions, the rating was the same. Providers rated ASQA s performance better on all parameters shown in figure 15 in Figure 15: Average provider responses to ASQA provider surveys 2013 and = very poor and 5.0 = excellent Proportionate, risk-based regulation 55

66 ASQA site audit surveys ASQA seeks feedback about its audit processes as part of ensuring that the audit process is consistent and transparent. Providers that have an ASQA site audit finalised are invited to provide feedback on their experience through a site audit survey. The survey is conducted four times each year. During the reporting period, ASQA invited audited providers to provide feedback on communication prior to the site visit, the site visit, audit team competencies, the audit report and the transparency of the audit process. There were 406 respondents across the four surveys. As shown in figure 16, responses were extremely positive, with each question receiving positive responses from more than 90 per cent of respondents. This level of satisfaction is consistent with previous years. Figure 16: Average results of four ASQA site audit surveys conducted in the period 1 July June Australian Skills Quality Authority Annual Report

67 Business processes Objective: Streamlined, user-friendly business processes developed and applied consistently across ASQA. During , ASQA carried out substantial work to further streamline its business processes. This was achieved through two key initiatives: ongoing work on the Information and Communications Technology (ICT) Strategic Initiative, which seeks to simplify and improve ASQA business processes through technology, and completing the implementation of the Quality Management System, developed during the previous reporting year. Using technology to regulate efficiently ICT Strategic Initiative progress The ICT Strategic Initiative seeks to identify and implement process improvements supported by improved technology to ensure ASQA operates as efficiently as possible. The system is due for implementation by December One component of the initiative will be the replacement of ASQA s current online registration management system, ASQAnet, with a more comprehensive system. The new core business system will allow ASQA to operate more efficiently and will also provide a more efficient interface for users registered training organisations, English language providers, and course owners. The new system will reduce the burden of regulation for users, by allowing each user to manage many registration processes quickly and easily online. Major work undertaken towards the completion of this project during the reporting period included the development of a Business Context Model, in which each of ASQA s business processes was formally reviewed and mapped. The Business Context Model outlines ASQA s: business functions corporate systems, business systems and data repositories team locations and sizes business owners (e.g. which roles are responsible for which business functions) stakeholders current business processes, and issues or problems identified with each process and the relevant systems. This model identified 24 business processes and developed 11 of these in detail. These 11 business processes cover most of ASQA s regulatory activity. Proportionate, risk-based regulation 57

68 Key performance indicator High levels of consistency and low levels of duplication in business processes ASQA has developed its Business Process Model with 11 unique business processes and 30 subprocesses. These business processes have been developed for ASQA s revised core business system, which is scheduled for implementation by December Once the new system is implemented, it will be used across ASQA to guide all business processes, ensuring consistency and preventing duplication. The extent to which these 11 business processes are incorporated into the new system will be the measure of success against this indicator. Effective reporting on this indicator will be possible after December 2015 when the revised system is implemented. (The Business Process Model will be maintained within ASQA as requirements change and as changes are made to the core business system.) Key performance indicator Internal users are satisfied with ICT systems and business processes ASQA conducted a survey of internal users across all ICT services in September 2013, with more than 70 per cent of staff responding. Users were asked about a range of ASQA ICT systems. Responses were positive, with users providing the following feedback on the two key internal systems: ASQAnet (online registration management system) 77 per cent of users rated ASQAnet as either very easy or moderately easy to use; more than 90 per cent of the respondents who used ASQAnet support found it helpful or moderately helpful. Intranet 86 per cent of users rated ASQA s intranet as either very easy or moderately easy to use; more than 94 per cent of the respondents who used ASQAnet support found it helpful or moderately helpful. User feedback will contribute to the ongoing development of ASQA s internal ICT systems. This is the first year in which ASQA has conducted this survey. These results will be compared with future survey results. Key performance indicator Projects meet end-user requirements No substantive ICT projects were implemented in the period. The ICT team has been working on the implementation of the ICT Strategic Initiative. 58 Australian Skills Quality Authority Annual Report

69 Quality Management System continuous improvement During , ASQA commenced numerous quality improvement exercises aimed at refining and embedding its existing quality management processes. The implementation of these quality improvements was guided by advice from key stakeholders, including the members of the Provider Roundtable. These exercises included: initiatives to speed up the processing of applications the implementation of a risk-based complaints process improving guidance and advice to providers and stakeholders, and working to improve the efficiency of ASQA s regulatory interventions (i.e. focusing on poor-quality high-risk providers). During , ASQA also finalised development of its tailored Quality Management System (QMS), which will be fully implemented during Action taken by ASQA towards implementing the QMS during the reporting year included: revising the Interim Quality Statement to provide more direction on: standardised formulation and control of procedures, forms and other documents, and control of records until the new Electronic Document and Records Management System (EDRMS) is operational in developing procedures and resources enabling: internal audits management reviews, and undertaking corrective and preventative actions. training and development of the internal auditor team, and establishing an internal audit schedule for July 2014 to June Proportionate, risk-based regulation 59

70

71 Management and accountability

72 Governance Objective: Sound governance policies and relevant, high-quality policy advice are developed and applied across ASQA s operations In , ASQA s corporate governance framework and practices ensured that ASQA s operations were efficient, effective and accountable. ASQA s corporate governance framework is realised through: the work of the Senior Management Group and its supporting committees the ASQA Quality Management System maintaining ethical standards and upholding Australian Public Service (APS) values, and ASQA-wide fraud control measures. As part of this framework, ASQA s Commissioners also meet formally to make decisions about regulatory policy. Commissioners meetings During the reporting period ASQA s Commissioners met formally on 51 occasions to consider items including: regulatory decisions about provider registrations, and regulatory policy decisions. Under the National Vocational Education and Training Regulator Act 2011, the Chief Commissioner is responsible for ensuring that Commissioners Meetings are held as necessary for the efficient performance of [ASQA s] functions. In addition, in : ASQA held 49 compliance meetings at which the Commissioner Compliance made regulatory decisions under the National Vocational Education and Training Regulator Act ASQA held 28 reconsideration meetings. At these meetings, the two Commissioners not involved in making the original decision considered the applications from providers for a review of the original decision. Senior Management Group The Senior Management Group comprises the Chief Commissioner/CEO; the Commissioner Compliance; the Commissioner Risk Analysis and Investigation; the National Manager Corporate; the National Manager Human Resources; and the Manager Governance, Policy and Quality. In the Senior Management Group provided a forum for ensuring: cooperation and consistency across ASQA business units, in order to achieve organisational objectives effective communication across the leadership group on major issues and priorities, and progress in implementing corporate strategies. 62 Australian Skills Quality Authority Annual Report

73 ASQA has established all relevant mandatory committees. These are: Audit Committee the Chief Executive Officer has established the Audit Committee in compliance with section 42 of the Public Governance and Performance Accountability Act 2013 (PGPA Act). The Audit Committee reports directly to the Chief Executive Officer, providing independent assurance and assistance on ASQA s risk, control and compliance framework and its external accountability responsibilities. Health and Safety Committee the Chief Executive Officer has established the Health and Safety Committee under Section of the Work Health and Safety Act The Health and Safety Committee reports directly to the Chief Executive Officer, providing advice on best practice and reports on incidents and compliance. Security Committee the Chief Executive Officer has established the Security Committee to ensure that ASQA can meet the requirements of the Australian Government s Protective Security Policy Framework (PSPF). The Security Committee reports to the Chief Executive Officer through the National Manager Corporate (as Agency Security Adviser), providing advice on security compliance and reports on incidents. The Security Committee incorporates Business Continuity Management and oversight of accommodation. In addition to these mandatory committees, the Senior Management Group is also supported by the following advisory committees: Finance Committee Communications Committee Quality Committee Staff Consultative Committee Information Management and Technology Committee Regulatory Managers Group ASQA Managers Forum. In the Senior Management Group guided and oversaw the completion of many important initiatives, including: a comprehensive review of ASQA s regulatory approach, in line with the Australian Government s deregulation agenda the development of a new external delegations model ASQA s input into the review of national standards, for both training providers and regulators completion of the first cycle of ASQA s Strategic Reviews, and the commencement of the second cycle of these reviews, and the development and implementation of a contemporary regulatory model for handling complaints against RTOs, including a risk-based Complaints Management Framework and risk-based Complaints Procedural Manual to assist ASQA to consistently and efficiently process complaints. Management and accountability 63

74 Input into policy review of the Standards for NVR RTOs 2011 During the reporting year, ASQA provided considerable policy advice relating to the review of the standards for the regulation of VET to both the NSSC and the VET Reform Taskforce. ASQA s advice focused on issues of quality in the sector and utilised data gathered since 1 July 2011 (including through provider feedback, regulatory intelligence and information collected during the Strategic Review process). The anticipated outcome of the review is one national set of standards for the regulation of VET appropriate for ensuring quality outcomes, which are more clearly documented and more capable of being consistently interpreted by RTOs and regulators, and effectively implemented through nationally consistent regulation. The revised standards are expected to be implemented in Key performance indicator Recipients of governance and policy advice find the advice credible and useful Advice to the NSSC and the VET Reform Taskforce ASQA provided policy advice on the Standards review through written submissions and through participation in workshops and other face-to-face meetings organised by the NSSC and the VET Reform Taskforce. A number of the recommendations made by ASQA were incorporated in the draft revised standards, which were released for consultation on 25 June ASQA also met its reporting requirements in relation to the NSSC, submitting its regulator report on 20 September Advice to other stakeholders In addition, as part of its stakeholder survey, ASQA asked two questions relating to the advice it provides per cent of survey respondents described ASQA s provision of timely and quality advice about the VET sector as excellent or good per cent of survey respondents described ASQA s provision of timely and quality advice on its regulatory activities as excellent or good. The results of the Stakeholder survey are discussed further on page 52 of this report. Internal reporting and audit Internal reporting plays a vital role in enabling senior employees to monitor ASQA s operational and budget performance and ASQA s progress in meeting performance requirements. During these reports included: monthly reports on finance, regulatory business statistics, complaints, issues and incidents, communications (website and Info line statistics), and quarterly reports on operational plan progress (targets and budget), human resources profiles, health and safety. 64 Australian Skills Quality Authority Annual Report

75 ASQA has developed a Quality Management System that involves the internal audit of ASQA business areas to ensure that established systems and processes are followed and drives a culture of continuous improvement across ASQA. Ethical standards ASQA employees, as Australian Public Service (APS) employees, are required under the APS Code of Conduct to behave at all times in a way which upholds the APS Values. The APS Values include maintaining the highest ethical standards. All ASQA ongoing and non-ongoing employees sign a Declaration of Interest document on commencement with ASQA. Senior Executive Service employees are required to sign this document annually. By signing the declaration, employees confirm that they are aware of their responsibilities under the APS Code of Conduct. ASQA s Human Resources team provides practical guidance on ethical standards to employees. ASQA s extranet provides links to the Ethical Standards Advisory Service on the Australian Public Service Commission website. Agency heads are also bound by the APS Code of Conduct, and have an additional duty to promote the APS Values. During , ASQA undertook one formal investigation into a suspected breach of the Code of Conduct. Fraud control ASQA has in place a Fraud Control Plan as well as other guidelines and policies which underpin fraud control in the agency. The plan meets the requirements of the Commonwealth Fraud Control Guidelines Collectively, these documents establish the framework for the management of fraud risks and the conduct of investigations. ASQA actively seeks to raise awareness of the fraud prevention measures set out in the Fraud Control Plan throughout ASQA. Fraud control certification is included in the letter of transmittal at the beginning of this report. Key performance indicator Internal and external audits demonstrate that legal and best practice requirements are fully satisfied In line with Australian Government policy the Productivity Commission has developed a Regulator Audit Framework that will be used by the Office of Best Practice Regulation (OBPR) to audit the performance of Australian Government regulators at least once each parliamentary term. ASQA, in anticipation of the OPBR audit, is working to ensure that its systems and processes meet the requirements set out in the Regulator Audit Framework. The first such audit is expected to occur within the next parliamentary term. Management and accountability 65

76 Budget and finance Financial management and financial performance Objective: ASQA s operations are managed within the allocated budget and in accordance with the Commonwealth financial and regulatory framework. During the reporting period, ASQA s operations were managed within the allocated budget and in accordance with the Commonwealth financial framework. ASQA has reported an operating loss for of $0.130m (0.3 per cent of departmental revenue) The operating loss is primarily due to the impact of depreciation and amortisation expenses ($3.166 million). ASQA obtained approval from the Finance Minister to carry an operational loss in the current and forward years primarily due to unfunded depreciation and amortisation expenses. The approved operating loss for was $2.494 million. ASQA s full departmental and administered results are shown in the audited financial statements. Key performance indicator ASQA s expenditure is managed within budget During the reporting period, ASQA s expenditure was managed within the budget appropriation by the Commonwealth Government. ASQA is reporting a surplus and is represented by: A surplus of $0.574m (3 per cent) against its employee expenses budget, predominantly due to difficulty recruiting staff to specialist compliance roles. A surplus of $1.636m (4 per cent) against its suppliers expense budget, attributed to reduced expenditure on contract auditors as a result of higher productivity of ASQA s staff auditors. Key performance indicator No Category A or B findings by Australian National Audit Office Category A rating applies to audit findings that pose a significant risk to ASQA and that should be addressed as a matter of urgency. Category B rating applies to audit findings that pose a moderate risk and should be addressed by ASQA within the next 12 months. Category C rating applies to findings that are procedural in nature or reflect relatively minor administrative shortcomings. ASQA received no category A, B or C finding for There were also no such findings for Australian Skills Quality Authority Annual Report

77 Key performance indicator All non-compliances identified by internal audit are addressed within 12 weeks During the reporting period, ASQA conducted internal audits on the following key areas: Revenue Payroll Travel and credit cards, and Work health and safety and rehabilitation management. All non-compliances identified through the internal audits were addressed in 12 weeks or less but one case ASQA Work Health and Safety and Rehabilitation Management Audit Report. The findings of the ASQA Work Health and Safety and Rehabilitation Management Audit Report are detailed and specific in nature and require a number of months to address. Given many findings relate to work of ASQA s auditors in the field, a consultative management response leading to extensive training and changes to operational procedures was deemed necessary. Within 12 weeks of the audit, a project plan to engage specialist Work Health and Safety resources to assist in the addressing of non-compliances was developed and approved. In comparison, in ASQA had six non-compliances that were not addressed within 12 weeks. These non-compliances have since been rectified as part of the implementation of the Protective Security Policy Framework (PSPF). Purchasing ASQA s procurement policies and practices are consistent with all relevant Australian Government laws, the Commonwealth financial framework (including the Commonwealth Procurement Guidelines), and other relevant policies. The Commonwealth Procurement Guidelines are applied to activities through the Chief Executive s Instructions and supporting operational guidelines. The procurement framework reflects the core principle governing Australian Government procurement value for money. Policies and procedures also focus on: encouraging competitive, non-discriminatory procurement processes, efficient, effective, economical and ethical use of resources, and accountability and transparency. Responsibility for procurement is devolved to individual business groups. ASQA supports this decentralised approach by: providing information and training about procurement policies and procedures to all staff, maintaining a single point of contact for staff to seek advice on the Commonwealth Procurement Guidelines, Finance s Chief Executive s Instructions and tendering processes, and standardised tendering and contracting documentation. Management and accountability 67

78 ASQA publishes its procurement activities and plans on AusTender, allowing its procurement activities to be readily communicated and accessible to all business enterprises. Consultants ASQA engages consultants where it lacks specialist expertise or when independent research, review or assessment is required. Consultants are typically engaged to investigate or diagnose a defined issue or problem; carry out defined reviews or evaluations; or provide independent advice, information or creative solutions. Prior to engaging consultants, ASQA takes into account the skills and resources required for the task, the skills available internally, and the cost-effectiveness of engaging external expertise. The decision to engage a consultant is made in accordance with the Financial Management and Accountability Act 1997 and related regulations including the Commonwealth Procurement Rules. During , ASQA entered into 38 new consultancy contracts, involving actual expenditure of $808,569. Assets management Section 12(10) of the Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies ( ) issued by the Department of Prime Minister and Cabinet sets out the requirement for an assessment of the effectiveness of assets management where it is a significant aspect of the strategic business of ASQA. Assets management does not form a significant aspect of ASQA s strategic business. Outcomes through purchaser-provider arrangements ASQA had purchaser-provider arrangements with the Shared Services Centre, which partners with the Department of Employment and Department of Education, during the reporting year. These arrangements related to the provision of corporate services, notably, information technology and payroll services. Australian National Audit Office access clauses ASQA is required to provide details of any contract of $100,000 or more (inclusive of GST) that does not provide a clause in the contract for the Auditor-General to have access to the contractor s premises. ASQA did not have any contracts over $100,000 that did not provide the clause for the Auditor-General to have access to the contractor s premises. Exempt contracts No contracts in excess of $10,000 (inclusive of GST) or standing offers have been exempted by the Chief Executive Officer from being published on AusTender during the reporting year. 68 Australian Skills Quality Authority Annual Report

79 Objective: Cost-recovery targets are achieved. This objective requires ASQA to achieve the cost recovery targets that are set by the Australian Government. To achieve its cost recovery targets, ASQA: reviewed cost recovery data each quarter analysed cost recovery data, and implemented revised fees and charges (following development of a Cost Recovery Impact Statement (CRIS) during ), with the new fees coming into effect on 31 July Key performance indicator Percentage of revenue target achieved ASQA had a cost recovery target from fees and charges of $24.079m for The actual total revenue ASQA generated was $19.632m, a shortfall of $4.447m. The shortfall resulted from: A $1.1m reduction in fee revenue resulting from a one-month delay in the approval and implementation of ASQA s Cost Recovery Impact Statement (CRIS). A $3.4m reduction in predicted charges revenue resulting from: ASQA s decision to not impose charges for post-initial audits to initial registration applications that were lodged before 13 July 2014, and a large number of compliance audits being excluded from ASQA s charges, due to being initiated before ASQA s charges policy came into effect. Management and accountability 69

80 People and culture Objective: ASQA has empowered, engaged and effective leaders and people As a relatively new agency, ASQA is developing a strong workplace culture of positive achievement throughout the organisation. All ASQA leaders participate in manager s forums two to three times per year. These forums are an opportunity for the Commissioners to engage with all managers as a group and to promote discussion on organisational priorities, strategic issues, regulatory performance and corporate governance issues. Senior Compliance managers participate in monthly Compliance Network meetings and all Compliance employees attend regular audit moderation workshops twice a year. As at 30 June 2014 ASQA had 204 employees, as well as three Commissioners, located in all capital cities in each state and territory (Table 5). Table 6 provides a breakdown of these employees by classification. Eighty three per cent of ASQA employees were ongoing (Table 7), 91 per cent were full-time (Table 8) and 68 per cent were female (Table 9). Key performance indicator Staff have enhanced skills that are applied in the workplace The second full cycle of the Performance Development Framework was undertaken in This process focused on building skill, capability, accountability, role alignment and clarity for all ASQA employees. As a result of the development of ASQA s strategic and operational plans, ASQA improved the Performance Development Framework by linking individual performance agreements with team plans developed from the objectives of the strategic and operational plans. Linking the strategic plans to individual performance agreements provided employees with greater clarity about their individual roles and responsibilities and how they directly contributed to ASQA s strategic direction. ASQA has implemented strategies developed from consultation workshops conducted with all employees regarding the results of the last employee census which was taken in the middle of ASQA uses an internal intranet site to ensure all employees receive timely and accurate communication and information. Key performance indicator High levels of staff satisfaction The last employee census results showed that ASQA employees have high levels of staff satisfaction with managers. Those results also indicated that employees have a clear understanding of how their work contributes to ASQA s strategic directions. In July 2013, ASQA established a Staff Consultative Committee. The purpose of this committee is to improve communication and consultation with all employees and to promote continuous improvement and organisational development across ASQA. 70 Australian Skills Quality Authority Annual Report

81 Key performance indicator Staff who currently underperform are managed effectively and within agreed processes ASQA has an underperformance management policy which was applied for all staff underperformance in the reporting period. Any staff identified as underperforming were managed in accordance with the policy. (Information on the performance of individual staff is confidential.) Work health and safety ASQA fulfils its responsibilities under the Work Health and Safety Act 2011 and has an established Work Health and Safety Committee. This committee comprises ASQA employees and is responsible for developing and implementing strategies to protect all employees from risks to their health and safety. ASQA has Health and Safety Representatives in each state and territory office. ASQA uses the service of an occupational therapist to provide onsite ergonomic support to all new employees and any employees experiencing pain or injury. Influenza vaccinations were available for all employees in April ASQA offers its employees and their families independent, confidential and professional counselling through the Employee Assistance Program. ASQA also offers all employees a healthy lifestyle allowance of up to $300 per year for expenditure on healthy lifestyle activities or equipment. There were no accidents or dangerous occurrences during the year that arose out of conduct of business or undertakings by ASQA that required notification to Comcare. There were no investigations conducted by Comcare during the year that related to undertakings conducted by ASQA. ASQA has trained staff who undertake duties as first aid officers, fire wardens, harassment contact officers and workplace health and safety representatives. Key performance indicator Compliance with occupational health and safety requirements In February 2014, ASQA engaged Ernst and Young to conduct an assessment of work health and safety and rehabilitation management at ASQA. The findings and recommendations from that assessment will form the framework for ASQA s work health and safety priorities in the year and beyond. Payroll ASQA outsources payroll and leave recording functions to the Shared Services Centre within the Department of Education and the Department of Employment on a fee for service basis. Management and accountability 71

82 Reports Table 5: ASQA employees by location as at 30 June 2014 ASQA office location Number of employees at location Melbourne 61 Sydney 42 Adelaide 15 Canberra 15 Brisbane 63 Perth 2 Hobart 4 Darwin 2 Total ASQA s Human Resources team is based in Melbourne and supports each of ASQA s offices around Australia in all areas of human resources. Table 6: ASQA employees by classification as at 30 June 2014 Classification Number SES Band 1 1 EL 2 18 EL 1 57 APS 6 54 APS 5 43 APS 4 13 APS 3 18 APS 2 0 APS 1 0 Total ASQA has three Commissioners as well as 204 employees 72 Australian Skills Quality Authority Annual Report

83 Table 7: ASQA employees by status as ongoing/non-ongoing as at 30 June 2014 Status Number Ongoing 170 Non-ongoing 34 Total 204 Table 8: ASQA employees by full-time/part-time status as at 30 June 2014 Status Number Full-time 187 Part-time 17 Total 204 Table 9: ASQA employees by gender, as at 30 June 2014 Gender Number Female 140 Male 64 Total 204 ASQA Enterprise Agreement The terms and conditions of employment for ASQA employees are set out in the ASQA Enterprise Agreement The ASQA Enterprise Agreement has a nominal expiry date of 30 June 2014 and will remain in effect until replaced by the next ASQA Enterprise Agreement. At the time of writing this report negotiations for the next ASQA Enterprise Agreement had commenced. At 30 June 2014, 203 ASQA employees were covered by the ASQA Enterprise Agreement , one SES employee was covered by an Individual S24 (1) Determination and three Commissioners were covered by Remuneration Tribunal Determinations. The salaries for employees covered by the ASQA Enterprise Agreement range from $47,039 for an APS level 1 employee at the bottom pay point to $134,543 for an EL 2 level employee at the top pay point. ASQA has four employees with individual flexibility agreements that vary the effect of the terms of the ASQA Enterprise Agreement Performance pay The ASQA Enterprise Agreement does not provide access to performance pay. Information on Commissioners and SES employee total remuneration is set out in Note 13: Senior Executive Remuneration of the financial statements. Management and accountability 73

84 External scrutiny Review of decisions Persons affected by an ASQA decision may, in certain circumstances, seek a review of that decision, or challenge the validity of an ASQA decision. The review may be either: a formal ASQA internal reconsideration of a decision, or an external review by the Administrative Appeals Tribunal or Court. Reconsideration of decisions by ASQA ASQA has a two-tiered decision-making process, which allows internal reconsideration of some reviewable decisions. If a person affected by an ASQA decision applies for reconsideration, the person may submit new evidence. This evidence will then be assessed by an officer who was not involved in the original decision-making process. The officer will recommend that the Commissioners affirm, vary or revoke the original decision. In , ASQA finalised 47 reconsideration applications. The results of these reconsiderations are shown in Table 10. ASQA can only undertake formal internal reconsideration of decisions made under the National Vocational Education and Training Regulator Act 2011 (NVR Act). Decisions under the Education Services for Overseas Students Act 2000 may only be reviewed by an external body. Table 10: Outcomes of reconsideration applications finalised by ASQA in Outcome of reconsideration application Decision revoked: Evidence provided to ASQA that non-compliance had been rectified Procedural issues relating to original decision identified Reason for original decision no longer exists Decisions affirmed (ASQA reviewed the reconsideration application and any relevant evidence, and found that the provider remained non-compliant) Number Decision varied (ASQA original decision revoked and new decision put in its place) 8 No decision made (procedural issues meant no decision required) 1 TOTAL Australian Skills Quality Authority Annual Report

85 Review by the Administrative Appeals Tribunal or Federal Court If a person is dissatisfied with the outcome of a decision made by ASQA, he or she may apply for review of the decision by the Administrative Appeals Tribunal or a Court. This section discusses the two kinds of review by Administrative Appeals Tribunal or Court that were undertaken in in relation to ASQA decisions. 1. A person may apply to the Administrative Appeals Tribunal for review of an ASQA decision, including the merits of such a decision 2. A person may apply for judicial review of ASQA s decision in the Federal Court. In ASQA received 56 applications in which training providers or applicants requested a review of a decision made by ASQA to a Tribunal or Court 20 of these were carried over from the previous financial year. Forty of these matters were dealt with and closed during and 16 have been carried into These details are shown in Table 11. Table 11: Total Tribunal and Court review applications received, closed and carried over as at 30 June 2014 Matter Number Carried into Opened 36 Total received 56 Total closed 40 Carried over to The outcomes of applications for review to a Tribunal or Court that were closed during the reporting period are shown in Table 12. Management and accountability 75

86 Table 12: Outcomes of closed Tribunal matters, 1 July June 2014 Outcome of the Tribunal matters The application was withdrawn by provider/applicant in this case, ASQA s decision stands Number of matters 9 Dismissed by Tribunal as outside jurisdiction in this case, ASQA s decision stands 2 Resolved between applicant and ASQA; new orders or decision in this case, ASQA and the applicant have reached an agreement which the Tribunal will give effect to by issuing orders or remitting the decision back to ASQA 25 ASQA s decision affirmed by Tribunal in this case, ASQA s decision stands 0 ASQA s decision set aside by Tribunal 2 Application discontinued with no orders 2 Decision set aside 0 TOTAL 40 Applications for review of decision resolved between ASQA and applicant More than half of the closed tribunal matters in were resolved by agreement being reached between ASQA and the applicant prior to the application for review being heard by the Tribunal. In most cases, this agreement results from the applicant: providing additional evidence (evidence that was not provided when ASQA made its original decision), and/or taking steps to rectify the non-compliance that ASQA has identified, and providing evidence showing that they have rectified this non-compliance. Judicial review by the Federal Court In total, two applications were made to the Federal Court for judicial review of an ASQA decision during and both were discontinued with no orders. 76 Australian Skills Quality Authority Annual Report

87 Other reports on operations The ASQA Process Review On 7 June 2013, the COAG Standing Council on Tertiary Education, Skills and Employment (SCOTESE) commissioned a review of the Australian Skills Quality Authority (ASQA). The purpose of the review was to consider ASQA s current regulatory approach, and how ASQA can optimise the efficiency of its operations. A Reference Committee, comprising representatives from Victoria, Queensland, South Australia, Tasmania and the Australian Government, oversaw the review. An independent consulting firm, PricewaterhouseCoopers began the review in late The findings of the review were published on 25 June 2014 in the ASQA Process Review: Final Report. This report identified six main areas where ASQA s efficiency could be improved. These were: 1. ASQA s existing information communication technology (ICT) systems do not facilitate the most efficient and effective business processes for the future of ASQA as a regulator. 2. ASQA is constrained by a variety of factors in the regulatory architecture. These factors drive some process inefficiencies that impact the timeliness and transparency of operations. 3. ASQA has evolved its risk model, but requires additional data about the sector and enhanced ICT capability to deliver further improvements. 4. A lack of coordination in training package updates issued by Industry Skills Councils creates unnecessary work for providers and impacts ASQA s operations. 5. A lack of guidance and clarity about the rules for national standards and training packages creates unnecessary work for ASQA and providers. 6. Communications with providers are not fully effective. ASQA shares responsibility for addressing some of these findings with the Australian Government and state and territory governments. ASQA published a formal response to the ASQA Process Review: Final Report. This noted that ASQA has become aware of many of the review s findings throughout its first three years of operation and is actively addressing most of these through regulatory reforms and business improvement activities. In particular, ASQA has commenced a major ICT transformation that will address many of the findings relating to technology and processes. (ASQA s ICT Strategic Initiative is discussed in detail on page 57 of this report.) Other key ASQA activities undertaken to address findings in the review include: a move toward a more risk-based (and less transaction-based ) style of regulation that is discussed throughout this report), and assuming the function of providing more information and guidance to providers about the required standards. This has involved revising Info line procedures to provide more specific information and advice, improved information on the ASQA website, and the development of comprehensive information to support the release of the new standards, as discussed in the section of this report on ASQA s VET Regulatory Reform, on page 46. Management and accountability 77

88

89 Financial statements

90 80 Australian Skills Quality Authority Annual Report

91 Financial statements 81

92 82 Australian Skills Quality Authority Annual Report

93 Australian Skills Quality Authority Statement of comprehensive income for the periond ended 30 June 2014 NET COST OF SERVICES Expenses Notes Employee benefits 3A 22,283 19,889 Supplier 3B 10,372 11,860 Depreciation and amortisation 3C 3,166 2,257 Finance Costs 3D 9 - Write-down and impairment of assets 3E - 75 Total expenses 35,830 34,081 Own-Source Income Own-source revenue Other revenue 4A Total own-source revenue Total own-source income Net cost of services (35,726) (33,893) Revenue from Government 4B 35,547 32,795 Deficit attributable to the Australian Government (179) (1,098) OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation surplus Total comprehensive income Total comprehensive income/(loss) attributable to the Australian Government (130) (1,078) The above statement should be read in conjunction with the accompanying notes. Financial statements 83

94 Australian Skills Quality Authority Statement of financial position as at 30 June 2014 ASSETS Financial Assets Notes Cash and cash equivalents 6A Trade and other receivables 6B 18,062 14,387 Total financial assets 18,357 14,645 Non-Financial Assets Leasehold improvements 7A, 7C 4,148 5,875 Property, plant and equipment 7B, 7C Intangibles 7D, 7E 3,880 2,843 Other non-financial assets 7F 5 - Total non-financial assets 8,232 8,980 Total assets 26,589 23,625 LIABILITIES Payables Suppliers 8A 1,950 1,964 Other payables 8B 1,232 1,273 Total payables 3,182 3,237 Provisions Employee provisions 9A 4,769 3,816 Other provisions 9B Total provisions 5,026 4,113 Total liabilities 8,208 7,350 Net assets 18,381 16,275 EQUITY Contributed equity 13,882 11,646 Revaluation of non-financial assets Retained surplus 4,430 4,609 Total equity 18,381 16,275 The above statement should be read in conjunction with the accompanying notes. 84 Australian Skills Quality Authority Annual Report

95 Australian Skills Quality Authority Statement of changes in equity as at 30 June 2014 Opening balance 2014 Retained earnings Asset revaluation surplus 2013 Contributed equity/capital Total equity 2013 Balance carried forward from previous period 4,609 5, ,646 7,974 16,275 13,681 Adjusted opening balance 4,609 5, ,646 7,974 16,275 13,681 Comprehensive income Surplus (Deficit) for the period (179) (1,098) (179) (1,098) Other comprehensive income Total comprehensive income (179) (1,098) (130) (1,078) Transactions with owners Contributions by owners Equity injection ,236 1,898 2,236 1,898 Restructuring ,774-1,774 Total transaction with owners ,236 3,672 2,236 3,672 Closing balance attributable to the Australian Government 4,430 4, ,882 11,646 18,381 16,275 The above statement should be read in conjunction with the accompanying notes. Financial statements 85

96 Australian Skills Quality Authority Cash flow statement for the period ended 30 June 2014 OPERATING ACTIVITIES Cash received Notes Appropriations 33,316 31,255 Sales of goods and rendering of services Net GST received Total cash received 33,429 31,591 Cash used Employees 21,183 17,462 Suppliers 10,640 13,102 Section 31 receipts transferred to OPA 1,441 1,852 Total cash used 33,264 32,416 Net cash from/(used by) operating activities (825) INVESTING ACTIVITIES Cash used Purchase of plant and equipment Purchase of leasehold improvements 136 1,612 Purchase of internally developed software 2,228 1,284 Total cash used 2,364 2,998 Net cash used by investing activities (2,364) (2,998) FINANCING ACTIVITIES Cash received Contributed equity 2,236 3,830 Total cash received 2,236 3,830 Net cash from financing activities 2,236 3,830 Net increase/(decrease) in cash held 37 7 Cash and cash equivalents at the beginning of the reporting period Cash and cash equivalents at the end of the reporting period 6A The above statement should be read in conjunction with the accompanying notes. 86 Australian Skills Quality Authority Annual Report

97 Australian Skills Quality Authority Schedule of commitments as at 30 June BY TYPE Commitments receivable Net GST recoverable on commitments Total commitments receivable Commitments payable Capital commitments IT Commitments 2 3,667 2,623 Total Capital commitments 3,667 2,623 Other commitments Operating leases 3 6,153 8,372 Other Total other commitments 6,283 8,725 Total commitments payable 9,950 11,348 Net commitments by type 9,251 10,612 BY MATURITY Commitments receivable Other commitments receivable Within 1 year Between 1 to 5 years Total other commitments receivable Total commitments receivable Commitments payable Capital commitments Within 1 year 673 1,147 Between 1 to 5 years 2,994 1,476 Total Capital commitments 3,667 2,623 Operating lease commitments Within 1 year 2,756 2,566 Between 1 to 5 years 3,397 5,806 Total operating lease commitments 6,153 8,372 Financial statements 87

98 Australian Skills Quality Authority Schedule of commitments (continued) as at 30 June 2014 Other Commitments Within 1 year Total other commitments Total commitments payable 9,950 11,348 Net commitments by maturity 9,251 10, Commitments are GST inclusive where relevant. 2. IT commitments relate to the development of ASQAnet and NIMBUS. 3. Lease payments are subject to percentage annual increases in accordance with lease agreements. 4. Other commitments include a range of other contracts, such as contractor and other panel services. Australian Skills Quality Authority Schedule of contingencies as at 30 June 2014 Contingent Assets ASQA estimates the value of contingent assets to be $nil (2013: $nil). Contingent Liabilities ASQA estimates the value of contingent liabilities to be $nil (2013: $nil). During , ASQA gave no financial guarantees. The above schedules should be read in conjunction with the accompanying notes. 88 Australian Skills Quality Authority Annual Report

99 Australian Skills Quality Authority Administered schedule of comprehensive income for the period ended 30 June 2014 NET COST OF SERVICES Expenses Notes Write-down and impairment of assets Total expenses Income Non-taxation revenue Fees and fines 18A 19,568 12,074 Other revenue 18B 64 - Total non-taxation revenue 19,632 12,074 Total revenue 19,632 12,074 Gains Reversals of previous asset write-downs 18C Total gains Total income 19,828 12,074 Net contribution by services 19,778 11,859 Total comprehensive income 19,778 11,859 The above schedule should be read in conjunction with the accompanying notes. Financial statements 89

100 Australian Skills Quality Authority Administered schedule of assets and liabilities as at 30 June 2014 ASSETS Financial Assets Notes Trade and other receivables ,012 Total financial assets 247 1,012 Total assets administered on behalf of Government 247 1,012 LIABILITIES Provisions Provision for refunds 21A Total provisions Total liabilities administered on behalf of Government Net assets/(liabilities) 12 1,012 Australian Skills Quality Authority Administered reconciliation schedule for the period ended 30 June Opening assets less liabilities as at 1 July 1,012 2,139 Net contribution by services Income 19,828 12,074 Expenses Transfers (to)/from the Australian Government Appropriation transfers from Official Public Account Special appropriations (limited) Appropriation transfers to OPA Transfers to OPA (21,195) (13,179) Closing assets less liabilities as at 30 June 12 1,012 The above schedules should be read in conjunction with the accompanying notes. 90 Australian Skills Quality Authority Annual Report

101 Australian Skills Quality Authority Administered cash flow statement for the period ended 30 June 2014 OPERATING ACTIVITIES Cash received Notes Sale of goods and rendering of services 21,160 13,179 Charges 35 - Total cash received 21,195 13,179 Cash used Refunds to registered training organisations Total cash used Net cash from/(used by) operating activities 22 20,778 12,986 Net increase/(decrease) in cash held 20,778 12,986 Cash and cash equivalents at the beginning of the reporting period - - Cash from Official Public Account Appropriations Total cash from official public account Cash to Official Public Account Appropriations 21,195 13,179 Total cash to official public account 21,195 13,179 Cash and cash equivalents at the end of the reporting period The above schedule should be read in conjunction with the accompanying notes. Financial statements 91

102 Australian Skills Quality Authority Administered schedule of commitments for the period ended 30 June 2014 ASQA estimates the value of Administered commitments to be $nil (2013: $nil). Australian Skills Quality Authority Administered schedule of contingencies for the period ended 30 June 2014 Contingent assets ASQA estimates the value of Administered contingent assets to be $nil (2103:$nil). Contingent liabilities ASQA estimates the value of Administered contingent liabilities to be $nil (2013:$nil). During , ASQA gave no financial guarantees. The above schedules should be read in conjunction with the accompanying notes. 92 Australian Skills Quality Authority Annual Report

103 Table of contents Notes to and forming part of the Financial Statements Note 1: Summary of Significant Accounting Policies 94 Note 2: Events After the Reporting Period 105 Note 3: Expenses 106 Note 4: Own-Source Income 108 Note 5: Fair Value Measurements 109 Note 6: Financial Assets 112 Note 7: Non-Financial Assets 113 Note 8: Payables 117 Note 9: Provisions 118 Note 10: Restructuring 119 Note 11: Cash Flow Reconciliation 120 Note 12: Contingent Assets and Liabilities 121 Note 13: Senior Executive Remuneration 122 Note 14: Remuneration of Auditors 124 Note 15: Financial Instruments 125 Note 16: Financial Assets Reconciliation 127 Note 17: Administered Expenses 127 Note 18: Administered Income 128 Note 19: Administered Fair Value Measurements 128 Note 20: Administered Financial Assets 129 Note 21: Administered Provisions 130 Note 22: Administered Cash Flow Reconciliation 131 Note 23: Administered Financial Instruments 131 Note 24: Administered Financial Assets Reconciliation 132 Note 25: Appropriations 132 Note 26: Compensation and Debt Relief 134 Note 27: Reporting of Outcomes 135 Note 28: Competitive Neutrality and Cost Recovery 136 Note 29: Net Cash Appropriation Arrangements 137 Financial statements 93

104 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies 1.1 Objectives of Australian Skills Quality Authority The Australian Skills Quality Authority (ASQA) is an Australian Government controlled entity. It is a not for profit entity. ASQA is the national regulator for Australia s vocational education and training (VET) sector. ASQA regulates courses and training providers to ensure nationally approved quality standards are met. The objectives of ASQA are: a) to provide for national consistency in the regulation of VET b) to regulate VET using: (i) (ii) a standards-based quality framework, and risk assessments, where appropriate c) to protect and enhance: (i) (ii) quality, flexibility and innovation in VET, and Australia s reputation for VET nationally and internationally d) to provide a regulatory framework that encourages and promotes a VET system that is appropriate to meet Australia s social and economic needs for a highly educated and skilled population e) to protect students undertaking, or proposing to undertake, Australian VET by ensuring the provision of quality VET, and f) to facilitate access to accurate information relating to the quality of VET. ASQA is structured to meet the following outcome: Outcome 1: To contribute to a high quality VET sector, including through streamlined and nationally consistent regulation of training providers and courses, and the communication of advice to the sector on improvements to the quality of VET. The continued existence of ASQA in its present form and with its present programs is dependent on Australian Government policy and on continuing funding by Parliament for ASQA s administration and programs. ASQA s activities contributing toward this outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by ASQA in its own right. Administered activities involve the management or oversight by ASQA, on behalf of the Government, of items controlled or incurred by the Government. ASQA conducts the following administered activities on behalf of the Australian Government: registering training organisations that meet national standards accrediting courses that meet national standards monitoring and enforcing compliance 94 Australian Skills Quality Authority Annual Report

105 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 providing advice to and making recommendations to the Portfolio Minister, and/or state and territory Ministers and/or the Ministerial Council on matters relating to VET collecting, analysing, interpreting and disseminating information about VET and the performance of registered training organisations. 1.2 Basis of Preparation of the Financial Statements The financial statements are general purpose financial statements and are required by section 49 of the Financial Management and Accountability Act The financial statements have been prepared in accordance with: a) Finance Minister s Orders (FMOs) for reporting periods ending on or after 1 July 2011, and b) Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period. The financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified. Unless an alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are recognised in the balance sheet when and only when it is probable that future economic benefits will flow to ASQA or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executor contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies. Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured. Administered revenues, expenses, assets, liabilities, and cash flows reported in the Schedules of Administered Items and related notes are accounted for on the same basis and using the same policies as for departmental items, except where otherwise stated at Note Significant Accounting Judgements and Estimates In the process of applying the accounting policies listed in this note, ASQA has made a judgement that has the most significant impact on the amounts recorded in the financial statements: the fair value of non-financial assets has been taken to be the market value of similar assets as determined by an independent valuer. Intangible assets are carried at cost with the useful life of 3-10 years based on management s assessment. Financial statements 95

106 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 the estimated present value of long service leave provision has been based on the Australian Government shorthand method. the provision for administered impairment of receivables has been based on historical results on the recoverability of receivables in different aging categories. No significant departmental accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period. No administered accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period. 1.4 New Australian Accounting Standards Adoption of New Australian Accounting Standard Requirements No accounting standard has been adopted earlier than the application date as stated in the respective standard. The following new standards, revised standards, interpretations, and amending standards were issued prior to the signing of the statements by the Chief Commissioner and Chief Financial Officer that were applicable to the current reporting period and had a financial impact on the Agency: AASB 13 Fair Value Measurement this revised standard requires fair value measurements for nonfinancial assets to be consistent with those for all financial assets and liabilities. All other new standards, revised standards, interpretations, and amending standards that were issued prior to the signing of the statements by the Chief Commissioner and Chief Financial Officer and are applicable to the current reporting period did not have a financial impact, and are not expected to have a future material financial impact on ASQA s financial statements. Future Australian Accounting Standard Requirements The following new standards, revised standards, interpretations and amending standards were issued by the Australian Accounting Standards Board prior to the signing of the financial statements by the Chief Commissioner and Chief Financial Officer, which are expected to have a material impact on ASQA s financial statements for future reporting periods: AASB 1055 Budgetary Reporting this new standard is applicable from 1 July 2014 and requires disclosure of ASQA s budget and commentary on significant variances in the financial statements. However, comparative budgetary information in relation to the previous reporting period is not required to be disclosed. All other new standards, revised standards, interpretations and amending standards that were issued prior to the signing of the statements by the Chief Commissioner and Chief Financial Officer and are applicable to the future reporting period are not expected to have a future material financial impact on ASQA. 96 Australian Skills Quality Authority Annual Report

107 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June Revenue Rendering of Services Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when: the amount of revenue, stage of completion and transaction costs incurred can be reliably measured, and the probable economic benefits associated with the transaction will flow to ASQA. The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date near to the estimated total costs of the transaction. Resources Received Free of Charge Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature. Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another government agency or authority as a consequence of a restructuring of administrative arrangements (refer to Note 1.7). Revenue from Government Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when ASQA gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts. 1.6 Gains Resources Received Free of Charge Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature. Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another government entity as a consequence of a restructuring of administrative arrangements (Refer to Note 1.7). Sale of Assets Gains from disposal of assets are recognised when control of the asset has passed to the buyer. Financial statements 97

108 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June Transactions with the Government as Owner Equity Injections Amounts appropriated which are designated as equity injections for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year. Restructuring of Administrative Arrangements Net assets received from or relinquished to another Australian Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity. Other Distributions to Owners The FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend. 1.8 Employee Benefits Liabilities for short-term employee benefits (as defined in AASB 119 Employee Benefits) and termination benefits expected within 12 months of the end of reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. Other long-term employee benefits are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. Leave The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of ASQA is estimated to be less than the annual entitlement for sick leave. The leave liabilities are calculated on the basis of employees remuneration at the estimated salary rates that will be applied at the time the leave is taken, including ASQA s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The liability for long service leave has been determined by the use of the Australian Government Actuary s shorthand method using the standard Commonwealth sector probability profile. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. Separation and Redundancy Provision is made for separation and redundancy benefit payments. ASQA recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out those terminations of employment. No provision has been made for separation and redundancy payments as ASQA has not formally identified any positions as excess requirements at 30 June Superannuation Staff of ASQA are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other schemes as chosen by individual employees. 98 Australian Skills Quality Authority Annual Report

109 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme. The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance as an administered item. ASQA makes employer contributions to the employee s superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of ASQA s employees. ASQA accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June 2014 represents outstanding contributions for the final fortnight of the year. 1.9 Leases A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. With operating leases, the lessor effectively retains substantially all such risks and benefits. ASQA does not have any finance leases. Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets. Lease incentives Lease incentives taking the form of rent-free periods, lessor fitout contributions or cash incentives are recognised as liabilities. These liabilities are amortised over the period of the lease on a straight line basis. The net present value of future net outlays in respect of surplus space under non-cancellable lease agreements is expensed in the period in which the space becomes surplus Borrowing Costs All borrowing costs are expensed as incurred Fair Value Measurement ASQA deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period Cash Cash is recognised at its nominal amount. Cash and cash equivalent includes cash on hand and any deposits held at call with a financial institution. All cash accounts are non-interest bearing Financial Assets ASQA classifies its financial assets in accordance with AASB 139 Financial Instruments: Recognition and Measurement. Financial statements 99

110 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 It has the following categories: a) financial assets at fair value through profit or loss; and b) loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. ASQA only holds financial assets of loans and receivables. Financial assets are recognised and derecognised upon trade date. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss. Financial Assets at Fair Value Through Profit or Loss Financial assets are classified as financial assets at fair value through profit or loss where the financial assets: a) have been acquired principally for the purpose of selling in the near future; b) are derivatives that are not designated and effective as a hedging instrument; or c) are part of an identified portfolio of financial instruments that the Department manages together and has a recent actual pattern of short-term profit-taking. Assets in this category are classified as current assets. Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset. Receivables Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as Trade receivables. Receivables are measured at amortised cost using the effective interest method less impairment. Impairment of Financial Assets Financial assets are assessed for impairment at the end of each reporting period. Financial assets held at amortised cost if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income. 100 Australian Skills Quality Authority Annual Report

111 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. Financial liabilities are recognised and derecognised upon trade date. Financial Liabilities at Fair Value Through Profit or Loss Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Other Financial Liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced) Contingent Liabilities and Contingent Assets Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote Acquisition of Assets Assets are recorded at cost on acquisition, except for financial assets which are initially measured at fair value plus any transaction costs. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken in bringing it to use. Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring or administrative arrangements. In the latter case, assets are initially recognised as contributions by owners in the Statement of Changes in Equity at the amounts at which they were recognised in the transferor s accounts immediately prior to the restructuring Property, Plant and Equipment Asset Recognition Threshold Purchases of property, plant and equipment are recognised initially at cost in the balance sheet, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). Financial statements 101

112 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to property leases taken up by ASQA where there exists an obligation to restore the property to its original condition. These costs are included in the value of ASQA s leasehold improvements with a corresponding provision for restoration obligations recognised. Revaluations Following initial recognition at cost, property, plant and equipment are carried at fair value less accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets. ASQA plans for a valuation every 3 years and a materiality review of the carrying value at fair value every other year. An independent qualified valuer undertook a valuation of the ASQA property, plant and equipment as at 30 June 2013 and conducted a materiality review of the carrying value as at 30 June Revaluation adjustments were made on a class basis. Any revaluation increment was credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus or deficit. Revaluation decrements for a class of assets were recognised directly in the surplus or deficit except to the extent that they reversed a previous revaluation increment for that class. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount. Fair values for each class of asset are determined as shown below: Fair value measured at Asset class Leasehold improvements Depreciated replacement cost Depreciated replacement cost Plant and equipment Exit price Market selling price Depreciation Depreciable property, plant and equipment are written-down to their estimated residual values over their estimated useful lives to ASQA using, in all cases, the straight-line method of depreciation. Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Depreciation rates applying to each class of depreciable asset are based on the following useful lives: Asset Class Leasehold improvements Lesser of the lease term & useful life Lesser of the lease term & useful life Plant and equipment Four to ten years Four to ten years 102 Australian Skills Quality Authority Annual Report

113 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Impairment All assets were assessed for impairment at 30 June Where indications of impairment exist, the asset s recoverable amount is estimated and an impairment adjustment made if the asset s recoverable amount is less than its carrying amount. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset s ability to generate future cash flows, and the asset would be replaced if ASQA were deprived of the asset, its value in use is taken to be its depreciated replacement cost. Derecognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal Intangibles ASQA s intangibles consist of internally developed software for internal use. These assets are carried at cost (except for purchases costing less than $2,000, which are expensed in the year of acquisition) less accumulated amortisation and accumulated impairment losses. Software is amortised on a straight-line basis over its anticipated useful life of five years. The useful lives of ASQA s software are 3 to 10 years ( : 3 to 10 years). All software assets were assessed for indications of impairment as at 30 June Taxation ASQA is exempt from all forms of taxation except for Fringe Benefits Tax (FBT) and Goods and Services Tax (GST). Revenues, expenses and non-financial assets are recognised net of GST except: where the amount of GST incurred is not recoverable from the Australian Taxation Office, and for receivables and payables Insurance ASQA has insured for risks through the Australian Government s risk management fund, Comcover. Workers compensation is insured through Comcare Australia. Financial statements 103

114 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June Reporting of Administered Activities Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the Schedules of Administered Items and related notes. Except where otherwise stated below, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards. Administered cash transfers to and from the Official Public Account Revenue collected by ASQA for use by the Australian Government, rather than ASQA, is administered revenue. Collections are transferred to the Official Public Account (OPA) and maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by ASQA on behalf of the Australian Government and reported as such in the Administered Cash Flow Statement, and in the Administered Reconciliation Schedule. Revenue All administered revenues are revenues relating to the course of ordinary activities performed by ASQA on behalf of the Australian Government. As such, administered appropriations are not revenues of ASQA that oversees distribution or expenditure of the funds as directed. Revenue is generated from collection of fees and charges for managing the registration of VET training providers and for accrediting courses. All revenue is recognised on a non-reciprocal basis, under Australian Accounting Standards; as such, revenue is recognised either when an application is lodged with ASQA or when ASQA generates an ASQA accounts receivable invoice. ASQA issues fee invoices under authority of a legislative instrument that is approved under subsections 232(1) and (5) of the National Vocational Education and Training Regulator Act ASQA issues some annual fees in accordance with fee schedules of former regulators and are issued under authority of section 5 of the National Vocational Education and Training Regulator (Transitional Provisions) Act ASQA issues charges invoices under authority of a legislative instrument that is approved under subsections 9(2) and 12(2) of the National Vocational Education and Training Regulator (Charges) Act These charges are considered taxes for purposes of section 55 of the Constitution, which provides that a law imposing a tax can only deal with taxation. For accounting purposes these charges are recognised as non-taxation revenue as like other administered fees and charges. Receivables Administered receivables have 30 day credit terms and are recognised at the nominal amount due less any impairment allowance account. Impairment allowances are made when collectability of the debt is no longer probable. Collectability of the debt is reviewed at balance date. Financial liabilities Administered financial liabilities comprise of a provision for refunds that ASQA expects to pay in regard to fees already paid. Registration assessment fees are refundable if applications do not proceed to the assessment phase. A component of annual fees may be refundable if registration ceases. 104 Australian Skills Quality Authority Annual Report

115 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June Constitutional Assessments of Government Spending The Australian Government continues to have regard to developments in case law, including the High Court s most recent decision on Commonwealth expenditure in Williams v Commonwealth [2014] HCA 23, as they contribute to the larger body of law relevant to the development of Commonwealth programs. In accordance with its general practice, the Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of expenditure not being consistent with constitutional or other legal requirements. Note 2: Events After the Reporting Period There were no subsequent events that had the potential to significantly affect the ongoing structure and financial activities of the entity. Financial statements 105

116 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 3: Expenses Note 3A: Employee Benefits Wages and salaries 15,841 14,339 Superannuation Defined contribution plans 2, Defined benefit plans 746 1,596 Leave and other entitlements 3,553 3,029 Total employee benefits 22,283 19,889 Note 3B: Suppliers Goods and services supplied or rendered Consultants Contractors 1,148 1,719 Panel auditors 638 2,055 Travel 1,269 1,196 IT services 2,380 1,911 Legal fees Property Office Other Total goods and services supplied or rendered 7,694 9,107 Goods supplied in connection with Related parties 5 3 External parties Total goods supplied Services rendered in connection with Related parties 1,628 1,816 External parties 5,789 7,138 Total services rendered 7,417 8,954 Total goods and services supplied or rendered 7,694 9, Australian Skills Quality Authority Annual Report

117 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 3B: Suppliers (continued) Other suppliers Operating lease rental in connection with Related parties Minimum lease payments 1,398 1,120 External parties Minimum lease payments 1,037 1,550 Workers compensation expenses Total other suppliers 2,678 2,753 Total suppliers 10,372 11,860 Note 3C: Depreciation and Amortisation Depreciation Property, plant and equipment Leasehold improvements 1,863 1,678 Total depreciation 1,975 1,775 Amortisation Intangibles 1, Total amortisation 1, Total depreciation and amortisation 3,166 2,257 Note 3D: Finance Costs Unwinding of discount 9 - Total finance costs 9 - Note 3E: Write-Down and Impairment of Assets Revaluation decrement Land and buildings - 75 Total write-down and impairment of assets - 75 Financial statements 107

118 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 4: Own-Source Income Note 4A: Other Revenue Transfer of assets - 5 Other revenue Resources received free of charge Total other revenue Note 4B: Revenue from Government Appropriations Departmental appropriations 35,547 32,795 Total revenue from Government 35,547 32, Australian Skills Quality Authority Annual Report

119 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 5: Fair Value Measurements The following tables provide an analysis of assets and liabilities that are measured at fair value. The different levels of the fair value hierarchy are defined below. Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. Note 5A: Fair Value Measurement Fair value measurements at the end of the reporting period by hierarchy for assets and liabilities in 2014 Non-financial assets: Fair value measurements at the end of the reporting period using Fair value Level 1 inputs Level 2 inputs Level 3 inputs Leasehold improvements 4, ,148 Plant and equipment Total non-financial assets 4, ,148 Total fair value measurements of assets in the statement of financial position 4, ,148 Fair value measurements highest and best use differs from current use for non-financial assets (NFAs) All non-financial assets are held for operational purposes and not held for deriving a profit. The current use of these assets is considered their highest and best use. Note 5B: Level 1 and Level 2 transfers for recurring fair value measurements Recurring fair value measurements transferred between Level 1 and Level 2 for assets and liabilities There have been no transfers between levels of the hierarchy during the year. Financial statements 109

120 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 5C: Valuation technique and inputs for Level 2 and Level 3 fair value measurements Non-financial assets Leasehold improvements (fitout) Property, plant and equipment Category (Level 2 or Level 3) Fair value Valuation technique(s) 1 3 4,148 Depreciated replacement cost Net present value Market approach Inputs used Replacement cost (price per square metre) Consumed economic benefit/ Obsolescence of asset Current restoration costs (price per square metre) Indexation rates Range (weighted average) 2 N/A 33.33% 10.00% (19.52%) p.a. $200 $ % 4.44% p.a. Discount rate 3.30% Adjusted market transactions N/A 1. There has been no changes in valuation technique during the period. 2. Significant unobservable inputs only. Not applicable for assets or liabilities in the Level 2 category. Recurring and non-recurring level 3 fair value measurements valuation processes ASQA procured the service of the Australian Valuation Office (AVO) to undertake a comprehensive valuation of all non-financial assets at 30 June ASQA tests the procedures of the valuation model as an internal management review at least once every 12 months (with a formal revaluation undertaken once every three years). If a particular asset class experiences significant and volatile changes in fair value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period), that class is subject to specific valuation in the reporting period, where applicable, regardless of the timing of the last specific valuation. ASQA has engaged the Australian Valuation Solutions (AVS) to review the models developed comply with AASB 13. There is no change in the valuation technique since the prior year. 110 Australian Skills Quality Authority Annual Report

121 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Recurring level 3 fair value measurements sensitivity of inputs Leasehold improvements consumed economic benefit/ obsolescence of asset The significant unobservable inputs used in the fair value measurement of ASQA s leasehold improvements asset classes relate to the consumed economic benefit/asset obsolescence. A significant increase (decrease) in this input would result in a significantly lower (higher) fair value measurement. Leasehold improvements current restoration costs, indexation rates and discount rate The significant unobservable inputs used in the fair value measurement of ASQA s leasehold restoration cost (make good) asset class relate to the current restoration costs, escalation rates and discount rates. A significant increase (decrease) in this cost and/or escalation rates and decrease (increase) in the discount rate would result in a significantly higher (lower) fair value measurement. Note 5D: Reconciliation for recurring Level 3 fair value measurements Recurring level 3 fair value measurements reconciliation for assets Non-financial assets Leasehold improvements 2014 Total 2014 Opening balance 5,875 5,875 Total gains/(losses) recognised in Statement of Comprehensive Income (1,863) (1,863) Purchases Closing balance 4,148 4,148 ASQA s policy for determining when transfers between levels are deemed to have occurred can be found in Note 1. Note 5E: Reconciliation for recurring Level 3 fair value measurements There are no recurring Level 3 fair value measurements for liabilities. Financial statements 111

122 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 6: Financial Assets Note 6A: Cash and Cash Equivalents Cash on hand or on deposit Total cash and cash equivalents Note 6B: Trade and Other Receivables Goods and services receivable in connection with Related parties 12 4 External parties 20 - Total goods and services receivables 32 4 Appropriations receivables For existing programs 17,849 14,118 Total appropriations receivables 17,849 14,118 Other receivables GST receivable from the Australian Taxation Office Total other receivables Total trade and other receivables (gross) 18,062 14,387 Trade and other receivables (net) expected to be recovered No more than 12 months 18,062 14,387 Total trade and other receivables (net) 18,062 14,387 Trade and other receivables (gross) aged as follows Not overdue 18,062 14,387 Total trade and other receivables (gross) 18,062 14, Australian Skills Quality Authority Annual Report

123 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 7: Non-Financial Assets Note 7A: Land and Buildings Leasehold improvements Fair value 6,011 5,875 Accumulated depreciation (1,863) - Total leasehold improvements 4,148 5,875 Note 7B: Property Plant and Equipment Fair value Accumulated depreciation (111) - Total other property, plant and equipment No indicators of impairment were found for leasehold improvements or property, plant and equipment. No leasehold improvements or property, plant or equipment are expected to be sold or disposed of within the next 12 months. Note 7C: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment for 2014 Leasehold improvements Property, plant and equipment Total As at 1 July 2013 Gross book value 5, ,137 Accumulated depreciation Total as at 1 July , ,137 Additions By purchase Non-cash purchase (49) - (49) Revaluations and impairments recognised in other comprehensive income Depreciation expense (1,863) (112) (1,975) Disposals: Other gross value - (1) - Other accumulated depreciation Total as at 30 June , ,347 Financial statements 113

124 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 7C: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment for 2014 (continued) Total as at 30 June 2014 represented by Leasehold improvements Property, plant and equipment Total Gross book value 6, ,321 Accumulated depreciation and impairment (1,863) (111) (1,974) Total as at 30 June , ,347 Note 7C: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment for 2013 As at 1 July 2012 Leasehold improvements Property, plant and equipment Total Gross book value 4, ,239 Accumulated depreciation (1,228) (114) (1,342) Total as at 1 July , ,897 Additions By purchase 1, ,714 Non-cash purchase From acquisition of entities or operations (including restructuring) 1, ,779 Revaluations recognised in the operating result (75) - (75) Revaluations and impairments recognised in other comprehensive income Depreciation expense (1,678) (97) (1,775) Total as at 30 June , ,137 Total as at 30 June 2013 represented by Gross book value 5, ,137 Accumulated depreciation and impairment Total as at 30 June , , Australian Skills Quality Authority Annual Report

125 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 7D: Intangibles Computer software Internally developed in progress 1, Internally developed in use 4,097 3,172 Accumulated amortisation (1,859) (668) Total computer software 3,880 2,843 Total intangibles 3,880 2,843 No indicators of impairment were found for intangibles. No intangibles are expected to be sold or disposed of within the next 12 months. Note 7E: Reconciliation of the Opening and Closing Balances of Intangibles for 2014 Computer software Total As at 1 July 2013 Gross book value 3,511 3,511 Accumulated amortisation and impairment (668) 668 Total as at 1 July ,843 2,843 Additions By purchase or internally developed 2,228 2,228 Amortisation (1,191) (1,191) Total as at 30 June ,880 3,880 Total as at 30 June 2014 represented by Gross book value 5,739 5,739 Accumulated amortisation and impairment (1,859) (1,859) Total as at 30 June ,880 3,880 Financial statements 115

126 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 7E: Reconciliation of the Opening and Closing Balances of Intangibles for 2013 Computer software Total As at 1 July 2012 Gross book value 2,100 2,100 Accumulated amortisation and impairment (186) (186) Net book value 1 July ,914 1,914 Additions By purchase or internally developed 1,411 1,411 Amortisation (482) (482) Net book value 30 June ,843 2,843 Net book value as of 30 June 2013 represented by Gross book value 3,511 3,511 Accumulated amortisation and impairment (668) (668) Total as at 30 June ,843 2,843 Note 7F: Other Non-Financial Assets Prepayments 5 - Total other non-financial assets 5 - Other non-financial assets expected to be recovered No more than 12 months 5 - Total other non-financial assets Australian Skills Quality Authority Annual Report

127 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 8: Payables Note 8A: Suppliers Trade creditors and accruals 1,950 1,964 Total suppliers 1,950 1,964 Suppliers expected to be settled No more than 12 months 1,683 1,732 More than 12 months Total suppliers 1,950 1,964 Suppliers in connection with Related parties External parties 1,370 1,494 Total suppliers 1,950 1,964 Settlement was usually made within 30 days. Note 8B: Other Payables Wages and salaries Superannuation Unamortised lease liabilities Total other payables 1,232 1,273 Other payables expected to be settled No more than 12 months More than 12 months Total other payables 1,232 1,273 Financial statements 117

128 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 9: Provisions Note 9A: Employee Provisions Leave 4,769 3,816 Total employee provisions 4,769 3,816 Employee provisions are expected to be settled No more than 12 months 3,299 2,491 More than 12 months 1,470 1,325 Total employee provisions 4,769 3,816 Note 9B: Other Provisions Provision for restoration obligations Total other provisions Other provisions are expected to be settled More than 12 months Total other provisions Provision for restoration Total As at 1 July Amounts reversed (49) (49) Unwinding of discount or change in discount rate 9 9 Total as at 30 June Australian Skills Quality Authority Annual Report

129 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 10: Restructuring Departmental Restructuring Department of Education, Employment and Workplace Relations Department of Innovation, Industry, Climate Change, Science, Research, and Tertiary Education 2 FUNCTION ASSUMED Assets recognised - Appropriation receivable Net land and buildings 1,774 - Total assets recognised 1, Liabilities recognised Leave provisions - (142) Total liabilities recognised - (142) Net assets/(liabilities) recognised 3 1,774 - Income assumed Recognised by the receiving entity - 1,244 Total income assumed - 1,244 Expenses assumed Recognised by the receiving entity - 1,011 Total expenses assumed - 1,011 There was no restructuring in As part of the Departmental of Education, Employment and Workplace Relations (DEEWR) capital appropriation, DEEWR was appropriated $4.5 million in order to establish ASQA. As a result of the establishment of ASQA in July 2011, ASQA assumed from DEEWR the $4.5 million appropriation in February On 1 July 2012, ASQA assumed a further $1.774 million of property, plant and equipment. ASQA recognised net assets transferred as contributions by owners in the Statement of Changes in Equity. 2. In November 2012 ASQA assumed the function of the Education Services of Overseas Students Act 2000 (ESOS). The function was transferred to ASQA as a result of an agreement under s. 32 of the FMA Act from the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education appropriation for Outcome The net assets assumed from all entities were $1.774 million. 4. In respect of functions assumed, the net book values of assets and liabilities were transferred to ASQA for no considerations. Financial statements 119

130 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 11: Cash Flow Reconciliation Reconciliation of cash and cash equivalents as per statement of financial position to cash flow statement Cash and cash equivalents as per Cash flow statement Statement of financial position Discrepancy - - Reconciliation of net cost of services to net cash from/(used by) operating activities Net cost of services (35,726) (33,893) Revenue from Government 35,547 32,795 Adjustments for non-cash items Depreciation / amortisation 3,166 2,257 Net write down of non-financial assets - 75 Movements in assets and liabilities Assets (Increase) / decrease in net receivables (3,675) (4,020) (Increase) / decrease in other non-financial assets (5) - Liabilities Increase / (decrease) in employee provisions 953 2,448 Increase / (decrease) in other provisions (40) 297 Increase / (decrease) in supplier payables (14) (1,509) Increase / (decrease) in other payables (41) 725 Net cash from/(used by) operating activities 165 (825) 120 Australian Skills Quality Authority Annual Report

131 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 12: Contingent Assets and Liabilities Quantifiable Contingencies ASQA had no quantifiable departmental contingencies at 30 June 2014 (2013: nil). Unquantifiable Contingencies ASQA had a number of legal matters against third parties as at 30 June 2014, however it is not possible to estimate the amounts of any eventual payments in relation to these legal matters. Significant Remote Contingencies ASQA had no significant remote departmental contingencies at 30 June 2014 (2013: nil). Quantifiable Contingencies ASQA had no quantifiable administered contingencies at 30 June 2014 (2013: nil). Unquantifiable Contingencies ASQA had no unquantifiable administered contingencies at 30 June 2014 (2013: nil). Significant Remote Contingencies ASQA had no significant remote administered contingencies at 30 June 2014 (2013: nil). Financial statements 121

132 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 13: Senior Executive Remuneration Note 13A: Senior Executive Remuneration Expense for the Reporting Period Short-term employee benefits Salary 881 1,004 Motor vehicle and other allowances Bonuses 5 - Total short-term employee benefits 1,077 1,220 Post-employment benefits Superannuation Total post-employment benefits Other long-term benefits Annual leave accrued Long-service leave Total other long-term employee benefits Total senior executive remuneration expenses 1,347 1,541 Note 13A is prepared on an accrual basis (therefore the performance bonus expenses disclosed above may differ from the cash Bonus paid in Note 13B). 122 Australian Skills Quality Authority Annual Report

133 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 13B: Average Annual Reportable Remuneration Paid to Substantive Senior Executives during the Reporting Period Average annual reportable remuneration paid to substantive senior executives in 2014 Average annual reportable remuneration 1 Substantive Senior Executives No. Reportable salary 2 $ Contributed superannuation 3 $ Total reportable remuneration (including part-time arrangements) Reportable allowances 4 $ Bonus paid 5 $ Total reportable remuneration $ Less than $195, $225,000 to $254, ,857 27,976 28,119 5, ,952 $315,000 to $344, ,617 41,194 52, ,959 $375,000 to $404, ,187 61,103 60, ,706 Total number of substantive senior executives 4 Average annual reportable remuneration paid to substantive senior executives in 2013 Average annual reportable remuneration 1 Substantive Senior Executives No. Reportable salary 2 $ Contributed superannuation 3 $ Total reportable remuneration (including part-time arrangements) Reportable allowances 4 $ Bonus paid 5 $ Total reportable remuneration $ Less than $195, $195,000 to $224, ,220 24,403 26, ,906 $225,000 to $254, ,003 26,374 28, ,601 $315,000 to $344, ,614 46,255 50, ,741 $405,000 to $434, ,266 76,966 59, ,170 Total number of substantive senior executives 5 Financial statements 123

134 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 13B: Average Annual Reportable Remuneration Paid to Substantive Senior Executives during the Reporting Period (continued) Note: 1. This table reports substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band. 2. Reportable salary includes the following: a) gross payments (less any bonuses paid, which are separated out and disclosed in the bonus paid column); b) reportable fringe benefits (at the net amount prior to grossing up for tax purposes); and c) reportable employer superannuation contributions. 3. The contributed superannuation amount is the average cost to the entity for the provision of superannuation benefits to substantive senior executives in that reportable remuneration band during the reporting period. 4. Reportable allowances are the average actual allowances paid as per the total allowances line on individuals payment summaries. 5. Bonus paid represents average actual bonuses paid during the reporting period in that reportable remuneration band. The bonus paid within a particular band may vary between financial years due to various factors such as individuals commencing with or leaving the entity during the financial year. Note 13C: Average Annual Reportable Remuneration Paid to Other Highly Paid Staff during the Reporting Period During the reporting period, there was no non-ses or non-director employee whose total reportable remuneration was $195,000 or more. Note 14: Remuneration of Auditors Financial statement audit services were provided free of charge to the entity by the Australian National Audit Office Fair value of the services received Financial statement audit services Total fair value of services received Australian Skills Quality Authority Annual Report

135 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 15: Financial Instruments Note 15A: Categories of Financial Instruments Financial Assets Receivables Cash and cash equivalents Trade and other receivables 32 4 Total receivables Total financial assets Financial Liabilities Financial liabilities measured at amortised cost Trade creditors 1,950 1,964 Total financial liabilities measured at amortised cost 1,950 1,964 Total financial liabilities 1,950 1,964 There was no income or expenses for financial assets and liabilities. The financial assets and liabilities are a reasonable approximation of their fair value. Note 15B: Credit Risk ASQA was exposed to minimal credit risk as loans and receivables were cash and trade receivables. The maximum exposure to credit risk was the risk from potential default of debtors. At year end the total amount of trade receivables was $32k (2013: $4k). This amount was not past due date and no impairment allowance was required. In addition, ASQA has policies and procedures in place to manage its debtors. ASQA held no collateral to mitigate against credit risk due to the minimal risk exposure. Credit quality of financial assets not past due or individually determined as impaired Not past due nor impaired 2014 Not past due nor impaired 2013 Past due or impaired 2014 Past due or impaired 2013 Cash and cash equivalent Trade and other receivables Total Financial statements 125

136 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 15C: Liquidity Risk ASQA s financial liabilities were payables. The exposure to liquidity risk was based on the notion that ASQA will encounter difficulty in meeting its obligations associated with financial liabilities. This was highly unlikely as ASQA is appropriated funding from the Australian Government and ASQA manages its budgeted funds to ensure it has adequate funds to meet payments as they fall due. In addition, ASQA has policies in place to ensure timely payments were made when due and has no past experience of default. All financial liabilities are settled within 30 days. Maturities for non-derivative financial liabilities 2014 On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total Trade creditors - 1, ,950 Total - 1, ,950 Maturities for non-derivative financial liabilities 2013 On demand Within 1 year 1 to 2 years 2 to 5 years > 5 years Total Trade creditors - 1, ,964 Total - 1, ,964 Note 15D: Market Risk Currency risk Currency risk refers to the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. ASQA is not exposed to foreign exchange currency risk. Interest rate risk Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. ASQA is not exposed to interest rate risk. 126 Australian Skills Quality Authority Annual Report

137 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 16: Financial Assets Reconciliation Notes Total financial assets as per statement of financial position 18,357 14,645 Less: Non-financial instrument components Appropriation receivables 17,849 14,118 Other receivables Total non-financial instrument components Total financial assets as per financial instruments note 15A Note 17: Administered Expenses Note 17: Write-Down and Impairment of Assets Impairment/(reversal) on receivables Total write-down and impairment of assets Financial statements 127

138 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 18: Administered Income Revenue Non-Taxation Revenue Note 18A: Fees and Fines Fees 19,568 12,074 Total fees and fines 19,568 12,074 Note 18B: Other Revenue Charges 64 - Total other revenue 64 - Total revenue 19,632 12,074 Gains Note 18C: Reversals of Previous Asset Write-Downs Reversal of previous asset write down Total reversals of previous asset write-downs and impairments Note 19: Administered Fair Value Measurements ASQA s administered assets and liabilities are related to fees and charges imposed under ASQA s enabling legislation, the National Vocational Education and Training Regulator Act 2011; the National Vocational Education and Training Regulator (Transitional Provisions) Act 2011 and the National Vocational Education and Training Regulator (Charges) Act As such, ASQA assets and liabilities are carried at a value determined by legislations and not at fair value. 128 Australian Skills Quality Authority Annual Report

139 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 20: Administered Financial Assets Trade and Other Receivables Other receivables Fees 416 1,406 Charges 29 - Total other receivables 445 1,406 Total trade and other receivables (gross) 445 1,406 Less impairment allowance Fees (198) (394) Total impairment allowance (198) (394) Total trade and other receivables (net) 247 1,012 Trade and other receivables (net) expected to be recovered No more than 12 months 247 1,012 Total trade and other receivables (net) 247 1,012 Trade and other receivables (gross) aged as follows Not overdue 178 1,096 Overdue by 0 to 30 days to 60 days to 90 days 4 15 More than 90 days Total trade and other receivables (gross) 445 1,406 Impairment allowance aged as follows Not overdue (1) (198) Overdue by 0 to 30 days (7) (9) 31 to 60 days - (5) 61 to 90 days - (4) More than 90 days (190) (178) Total impairment allowance (198) (394) Financial statements 129

140 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 20: Administered Financial Assets (continued) Reconciliation of the Impairment Allowance Movements in relation to 2014 Other receivables Total Opening balance Amounts recovered and reversed (196) (196) Closing balance Movements in relation to 2013 Other receivables Total Opening balance Amounts recovered and reversed Closing balance Note 21: Administered Provisions Note 21: Administered Provisions Provision for refunds Total other provisions Other provisions are expected to be settled in: No more than 12 months Total other provisions Australian Skills Quality Authority Annual Report

141 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 22: Administered Cash Flow Reconciliation Reconciliation of cash and cash equivalents as per administered schedule of assets and liabilities to administered cash flow statement Cash and cash equivalents as per Schedule of administered cash flows - - Schedule of administered assets and liabilities - - Discrepancy - - Reconciliation of net cost of services to net cash from operating activities Net contribution by services 19,778 11,859 Movements in assets and liabilities Assets Decrease in net receivables 765 1,127 Increase in other provisions Net cash from operating activities 20,778 12,986 Note 23: Administered Financial Instruments ASQA s administered receivables are imposed under ASQA s enabling legislation, the National Vocational Education and Training Regulator Act 2011; the National Vocational Education and Training Regulator (Transitional Provisions) Act 2011 and the National Vocational Education and Training Regulator (Charges) Act 2012, so they are not considered as financial instruments. As at 30 June 2014, there are no Administered financial instruments for ASQA. Financial statements 131

142 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 24: Administered Financial Assets Reconciliation Total financial assets as per administered schedule of assets and liabilities 247 1,012 Less: Non-financial instrument components Taxation receivables 29 - Other receivables 218 1,012 Total non-financial instrument components 247 1,012 Total financial assets as per financial instruments note - - Note 25: Appropriations Table A: Annual Appropriations ( Recoverable GST exclusive ) DEPARTMENTAL 2014 Appropriations Appropriation Appropriation Act Annual Appropriation Section 31 FMA Act Section 32 Total appropriation applied in 2014 (current and prior years) Variance Ordinary annual services 1 35, ,757 (31,850) 3,907 Other services Equity 2,236-2,236 (2,230) 6 Total departmental 37, ,993 (34,080) 3, Australian Skills Quality Authority Annual Report

143 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 25: Appropriations (continued) DEPARTMENTAL Appropriation Act 2014 Appropriations FMA Act Appropriation applied in 2014 (current Annual Appropriation Section 31 Section 32 Total appropriation and prior years) Variance Ordinary annual services 2 31,551 1,852 1,244 34,647 (30,564) 4,083 Other services Equity 3 1,898-1,898 (2,998) (1,100) Total departmental 33,449 1,852 1,244 36,545 (33,562) 2,983 Notes: 1. There were no appropriations reduced under Appropriation Acts (No.1,3,5) for and ; sections 10, 11, 12 and 15; or via a determination by the Finance Minister. However, $40,000 of the Appropriation Act 1 for was quarantined by the Department of Finance as part of an efficiency measure ($6k) and a parameter adjustment ($34k). 2. Unspent appropriations were due to the deferral of the state regulators transitioning power and their related costs to ASQA. The result was a lower than expected FTE which had a direct impact on employment and other overhead costs. 3. The over spent equity injection appropriation related to internally developed software (ASQAnet) for the purpose of supporting ASQA s database and registration billing system. Table B: Departmental and Administered Capital Budgets ( Recoverable GST exclusive ) There were no departmental capital budget or administered capital budget received by ASQA in the current and prior years. Table C: Unspent Departmental Annual Appropriations ( Recoverable GST exclusive ) Departmental Appropriation Act (No.1) ,551 Appropriation Act (No.1) ,633 6,567 Appropriation Act (No.1) ,505 - Appropriation Act (No.2) Total 18,144 14,118 Financial statements 133

144 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 25: Appropriations (continued) Table D: Special Appropriations Applied ( Recoverable GST exclusive ) Authority Type Purpose Financial Management and Accountability Act 1997 s.28(2), Administered Refund To provide an appropriation where an Act or other law requires or permits the repayment of an amount received by the Commonwealth and apart from this section there is no specific appropriation for the repayment. Appropriation applied Total Note 26: Compensation and Debt Relief Compensation and Debt Relief Departmental 2014 $ 2013 $ No Act of Grace payments were expensed during the reporting period (2013: Nil). - - No waivers of amounts owing to the Australian Government were made pursuant to subsection 34(1) of the Financial Management and Accountability Act 1997 (2013: Nil). - - One payment was provided under the Compensation for Detriment caused by Defective Administration (CDDA) Scheme during the reporting period (2013: Nil). 256,106 - No ex-gratia payments were provided for during the reporting period (2013: Nil). - - No payments were provided in special circumstances relating to the APS employment pursuant to section 73 of the Public Service Act 1999 (PS Act) during the reporting period (2013: Nil) Australian Skills Quality Authority Annual Report

145 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 26: Compensation and Debt Relief (continued) Compensation and Debt Relief Administered 2014 $ 2013 $ No Act of Grace payments were expensed during the reporting period. (2013: Nil). - - No waivers of amounts owing to the Australian Government were made pursuant to subsection 42(1) of the Financial Management and Accountability Act (2013: Nil). No payments were provided under the Compensation for Detriment caused by Defective Administration (CDDA) Scheme during the reporting period. (2013: Nil). - - No ex-gratia payments were provided for during the reporting period. (2013: Nil). - - No payments were provided in special circumstances relating to APS employment pursuant to section 73 of the Public Service Act 1999 (PS Act) during the reporting period. (2013: Nil). - - Note 27: Reporting of Outcomes Note 27: Net Cost of Outcome Delivery Departmental 2014 Outcome Total 2013 Expenses 35,830 34,081 35,830 34,081 Own-source income Administered Expenses Income 19,632 12,074 19,632 12,074 Net cost of outcome delivery (16,144) (22,034) (16,144) (22,034) Financial statements 135

146 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 28: Competitive Neutrality and Cost Recovery Cost Recovery Summary Amounts applied Departmental Annual appropriations 35,547 32,795 Administered Special appropriations Total amounts applied 35,964 32,988 Expenses Departmental 35,830 34,081 Administered Total expenses 35,880 34,296 Revenue Administered 19,632 12,074 Total revenue 19,632 12,074 Receivables Not overdue 178 1,096 Overdue by 0 to 30 days to 60 days to 90 days 4 15 More than 90 days Total receivables 445 1,406 Cost recovered activities: ASQA is a cost recovery agency. ASQA s cost recovery arrangements are outlined in ASQA s Cost Recovery Impact Statement, which is available at: Australian Skills Quality Authority Annual Report

147 Australian Skills Quality Authority Notes to and forming part of the financial statements for the year ended 30 June 2014 Note 29: Net Cash Appropriation Arrangements Total comprehensive income less depreciation/amortisation expenses previously funded through revenue appropriations 1 3,036 1,179 Plus: depreciation/amortisation expenses previously funded through revenue appropriation (3,166) (2,257) Total comprehensive income (loss) as per the Statement of Comprehensive Income (130) (1,078) 1. From , the Government introduced net cash appropriation arrangements, where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditures is required. Financial statements 137

148

149 Appendices

150 Appendix 1 Regulatory decisions overview Administrative sanctions ASQA made 25 decisions to cancel the registration of a provider in accordance with the paragraph 36(2) (f) and section 39 of the National Vocational Education and Training Regulatory Act Where these decisions can be published, they are shown in Table 13. Table 13: Providers affected by ASQA decisions to cancel their registration, 1 July June 2014* RTO number RTO legal name Bishop, Kelli-Jane Bradford Employment Services and Training Pty Ltd E Word Development Pty Ltd J9 Consulting Pty Ltd Management Educational Training and Consultancy Services Pty Ltd MGGM Trading Pty Ltd Security Code Pty Ltd Shoretec Security Pty Ltd as Trustee for The Security Training Academy Trust Synergy Training & Consulting Pty Ltd Trade Education Centre Pty Ltd Victorian Independent Training and Assessment Group Pty Ltd Yin Enterprises Pty Ltd * This list does not include the details of: decisions that were subsequently varied, set aside or resolved by consent (e.g. via Administrative Appeals Tribunal [AAT], or ASQA process) decisions subject to an application for reconsideration or review which had not been finalised at the time of reporting decisions that were still eligible for review process at the time of reporting. ASQA made 49 decisions to suspend all or part of a registration of a provider in accordance with the paragraph 36(2)(e) and section 38 of the National Vocational Education and Training Regulatory Act Where these decisions can be published, they are shown in Table Australian Skills Quality Authority Annual Report

151 Table 14: Providers affected by ASQA decisions to suspend their registration, 1 July June 2014* RTO number RTO legal name Australia Study Group Pty Ltd Australian Rescue and Emergency Management Pty Ltd 6995 Beaumont International Cocktails Pty Ltd Best Practice Project Management Pty Ltd Clean Room Garments Pty Ltd College of Somatic Studies Pty Ltd, The Garwen Education Pty Ltd Global Medical Education Online Pty Ltd Links International College Pty Ltd Mantra Training and Development Pty Ltd Marine & Offshore Safety Training Pty Ltd Out of the Box Business Solutions Pilates Canberra Quantec Solutions Pty Ltd RJM Security Network Pty Ltd S & L Training Services Pty Ltd Security Code Pty Ltd T & M Training Pty Ltd World Workers Training Centre Pty Ltd Zieland Australian Pty Ltd * This list does not include the details of: decisions that were subsequently varied, set aside or resolved by consent (e.g. via Administrative Appeals Tribunal [AAT], or ASQA process) decisions subject to an application for reconsideration or review which had not been finalised at the time of reporting decisions that were still eligible for review process at the time of reporting. ASQA gave a further 188 written notices of intention to cancel or suspend the registration of a provider. ASQA made 35 decisions to impose another type of administrative sanction in accordance with paragraphs 36(2)(a)-(d) of the National Vocational Education and Training Regulatory Act Where these decisions can be published, they are shown in Table 15. Appendices 141

152 Table 15: ASQA decisions to impose administrative sanctions (other than cancellation or suspension of registration)* RTO number RTO legal name Type of sanction Andrew Lamb Amend scope Australian National Institute of Business & Technology Pty Ltd Australian National Institute of Business & Technology Pty Ltd Amend scope Give a written direction Direct Insight Consulting & Training Pty Ltd Amend scope Enterprise Management Group Pty Ltd Impose a condition G L Marketing & Distribution Pty Ltd Amend scope 2292 Tactical Training (Australia) Pty Ltd Amend scope Training Experts Australia Pty Ltd Give a written direction Training Sense Pty Ltd Amend scope * This list does not include the details of: decisions that were subsequently varied, set aside or resolved by consent (e.g. via Administrative Appeals Tribunal [AAT], or ASQA process) decisions subject to an application for reconsideration or review which had not been finalised at the time of reporting decisions that were still eligible for review process at the time of reporting. List does not include a decision that is subject to a confidentiality order. ASQA made 33 decisions to reject an application for renewal of registration in accordance with section 17 of the National Vocational Education and Training Regulatory Act Where these decisions can be published, they are as shown in Table 16. Note that a provider may have its application for CRICOS and/or VET registration renewal rejected, where this has occurred, a provider is only listed once. 142 Australian Skills Quality Authority Annual Report

153 Table 16: Providers affected by ASQA decisions to reject their application/s for re-registration, 1 July June 2014* RTO number RTO legal name Academy of Applied Hypnosis Pty Ltd 6779 Austraining (NSW) Pty Ltd Australian Security Management Pty Ltd Enterprise Management Group Pty Ltd Harvest Education Technical College Pty Ltd as trustee for the HETC Trust King s Institute of Management and Technology Pty Ltd Michelle Louise Merrifield New Deal Ltd Stephen Yeates Investigations Pty Ltd 4833 Studio Hairdressing and Beauty Services Pty Ltd Wright Solution QLD Pty Ltd * This list does not include the details of: decisions that were subsequently varied, set aside or resolved by consent (e.g. via Administrative Appeals Tribunal [AAT], or ASQA process) decisions subject to an application for reconsideration or review which had not been finalised at the time of reporting decisions that were still eligible for review process at the time of reporting. Appendices 143

154 Appendix 2 Other mandatory information Ecologically Sustainable Development and Environmental Performance Reporting ASQA s commitment to operating in accordance with the principles of ecological sustainable development and against government policy requirements is demonstrated through the development and implementation of an Environmental Management System (EMS). In line with the EMS, ASQA is committed to continual progress by: complying with applicable environment legal requirements and government policy under the Environment Protection and Biodiversity Conservation Act 1999 and the Australian National Audit Office Better Practice Guide on Public Sector Environmental Management in April 2012 incorporating environmental practices into our business planning and management processes setting and meeting environmental objectives and targets monitoring and continually improving our environmental performance, and considering environment practices for all procurement of goods and services. Current ASQA initiatives to reduce environmental impact include: energy efficient accommodation that utilises natural light monitoring and managing water usage by fitting water saving devices lighting operating under movement and sensor controls recycling and waste services, enabling waste separation by providing paper recycling boxes at each work point sleep mode and power down on all electronic equipment, and minimising paper usage by developing an electronic operating environment. Environmental management principles are being implemented for the refurbishment of the Adelaide offices. The building owner is targeting a 4.5 National Australian Built Environment Rating System (NABERS) rating for the building. Complementing this, the building fit out includes sensor controls for lights to all rooms (lights will turn off when there is no activity after ten minutes), and workstations and furniture will be supplied by companies who meet ISO Environmental Management Systems. The nominated fit out contractor has established management systems conforming to AS/NZA ISO 9001:2008, AS.NZS 4801:2001 & AS/NZS ISO 14001:2004 and the company delivers projects meeting environmentally sustainable practices. Environmental audits are to be rolled out in the financial year in all ASQA offices. The audit recommendations will be used to establish baseline standards and requirements for ASQA s environmental performance and will provide tools to monitor and improve performance. Advertising and market research During the financial year, the Australian Skills Quality Authority paid: Australian Survey Research Group Pty Ltd $26, (inclusive of GST) to undertake the ASQA Stakeholder Survey and produce a report of the findings 144 Australian Skills Quality Authority Annual Report

155 Quinntessential Marketing $18,389 (inclusive of GST) being the licence fee for the online survey software used to undertake the ASQA Strategic Reviews Australian Survey Research Group Pty Ltd $12, (inclusive of GST) to undertake the ASQA Stakeholder Survey Australian Survey Research Group Pty Ltd $12, (inclusive of GST) being the annual license fee for Survey Manager, a web-based survey management application used by ASQA for smaller, targeted surveys Vision6 Pty Ltd $2, (inclusive of GST) being the cost of distributing ASQA s enewsletter, ASQA Update, to subscribers During , the Australian Skills Quality Authority did not pay any monies to undertake any advertising campaigns, or any monies to: polling organisations media advertising organisations. Grant programs The Australian Skills Quality Authority does not administer any government grants. Disability reporting Changes to disability reporting in annual reports Since 1994, Commonwealth departments and agencies have reported on their performance as policy adviser, purchaser, employer, regulator and provider under the Commonwealth Disability Strategy. In , reporting on the employer role was transferred to the Australian Public Service Commissioner s State of the Service Report and the APS Statistical Bulletin. These reports are available as au. From , departments and agencies have no longer been required to report on these functions. The Commonwealth Disability Strategy has been overtaken by the National Disability Strategy , which sets out a ten year national policy framework to improve the lives of people with disability, promote participation and create a more inclusive society. A high level two-yearly report will track progress against each of the six outcome areas of the Strategy and present a picture of how people with a disability are faring. The first of these reports will be available in late 2014, and can be found at Information Publication Scheme Agencies subject to the Freedom of Information Act 1982 are required to publish information to the public as part of the Information Publication Scheme. This requirement, in Part II of the Freedom of Information Act 1982, has replaced the former requirement to publish a Section 8 statement in an annual report. Each agency must display on its website a plan showing what information it publishes in accordance with the IPS requirements. ASQA s Information Publication Scheme plan can be viewed at: Appendices 145

156 Appendix 3 ASQA addresses Adelaide Level 5, 115 Grenfell St, Adelaide, SA, 5000 Brisbane Level 7 & 8, 215 Adelaide St, Brisbane, QLD, 4000 Canberra Level 3, 64 Northbourne Ave, Canberra City Darwin Level 3, Woods St, Darwin, NT, 0820 Hobart Level 11, 188 Collins St, Hobart, TAS, 7000 Melbourne Level 6, 595 Collins St, Melbourne, Vic 3000 Perth Level 11, 250 St Georges Tce, Perth, WA, 6000 Sydney Level 10, 255 Elizabeth St, Sydney, NSW, Australian Skills Quality Authority Annual Report

157 Appendix 4 Agency resource statement The total resources from all sources are shown in Table 17. The table reconciles the usage of all resources by declaring the actual available appropriation for (including carried forward cash balances and further adjustments such as section 32 transfers under the FMA Act), and comparing this to the actual payments made. Table 17: Australian Skills Quality Authority Resource Statement Actual available appropriation for Payments made Balance remaining Ordinary annual services 1 Departmental appropriation 49,875 32,032 17,843 Total 49,875 32,032 17,843 Total ordinary annual services A 49,875 32,032 17,843 Other services 2 Departmental non-operating Equity injections 2,236 2,230 6 Total 2,236 2,230 6 Total other services B 2,236 2,230 6 Total available annual Appropriations and payments 52,111 34,262 Total resourcing and payments A+B 52,111 34,262 Total net resourcing for ASQA 52,111 34, Appropriation Bill (No.1) This also includes prior year departmental appropriation and section 31 relevant agency receipts. 2. Appropriation Bill (No.2) Appendices 147

158 Appendix 5 Expenses and resources for outcome Table 18: Total expenses for ASQA s Outcome 1 by programme Outcome 1: Contribute to a high quality vocational education and training sector, including through streamlined and nationally consistent regulation of training providers and courses, and the communication of advice to the sector on improvements to the quality of vocational education and training. Budget* Actual Expenses Variation (a) (b) (a) - (b) Program 1.1: Regulation and advice Administered expenses Special appropriations - 50 (50) Departmental expenses Departmental appropriation 1 35,547 32,664 2,883 Expenses not requiring appropriation in the Budget year 2,494 3,166 (672) Total for Program ,041 35,880 2,161 Outcome 1 Totals by appropriation type Administered expenses Special appropriations - 50 (50) Departmental expenses Departmental appropriation 1 35,547 32,664 2,883 Expenses not requiring appropriation in the Budget year 2,494 3,166 (672) Total expenses for Outcome 1 38,041 35,880 2, Average Staffing Level (number) * Full year as reported in the Portfolio Budget Statement. 1. Departmental Appropriation combines Ordinary annual services (Appropriation Bill No. 1) and Revenue from independent sources (section 31). 148 Australian Skills Quality Authority Annual Report

159 References

160 Glossary accreditation The formal recognition of a vocational education and training course by the Australian Skills Quality Authority. accredited VET course A structured sequence of training developed to meet training needs that are not addressed by existing training packages. ASQA Infoline ASQA s Melbourne-based contact centre. ASQA process review An independent review of ASQA s regulatory approach and efficiency and effectiveness of operations that was commissioned by the COAG Standing Council on Tertiary Education, Skills and Employment. ASQA providers Organisations registered by ASQA to deliver training and/or conduct assessments and issue nationally recognised qualifications. ASQAnet ASQA s online application system for vocational education and training applications. ASQAnet is also the agency s internal business system for managing and maintaining application, registration and regulatory processes, decisions, activity and information. audit, see compliance audit and registration audit audit moderation A process of collaborative discussion for compliance staff to achieve a consistent interpretation of relevant standards and legislative obligations to support decisions on provider compliance. Australian Qualifications Framework (AQF) A unified system of national qualifications in schools, vocational education and training (TAFEs and private providers) and the higher education sector (mainly universities). Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) An online database of courses and educational institutions or providers in Australia that are registered to offer courses to overseas students with student visas. competency An individual s demonstrated capacity to perform a task or skill. compliance Compliance is reached when requirements of the VET Quality Framework or Standards for VET Accredited Courses have been met. compliance audit The systematic and documented process used to assess a provider s ongoing compliance with the VET Quality Framework and other relevant standards. 150 Australian Skills Quality Authority Annual Report

161 Compliance audits are scheduled at ASQA s discretion with the authority of an ASQA Commissioner. The cost of ASQA undertaking a compliance audit of a registered training organisation is chargeable to that provider. ASQA has the authority to undertake compliance audits of providers outside Australia. ASQA does not currently have legislative authority to charge CRICOS providers for the cost of a compliance audit. cost recovery Cost recovery broadly encompasses fees and charges related to the provision of government goods and services (including regulation) to the private and other sectors of the economy. As a cost recovery agency, ASQA must recover the costs of performing regulatory activities through fees and charges. Cost Recovery Impact Statement (CRIS) A document prepared for significant cost recovery arrangements to demonstrate compliance with the Australian Government Cost Recovery Guidelines. Council of Australian Governments (COAG) The peak intergovernmental forum in Australia. The members of COAG are the Prime Minister, State and Territory Premiers and Chief Ministers and the President of the Australian Local Government Association (ALGA). The Prime Minister chairs COAG. course owner The owner of an accredited vocational education and training course. Data Provision Requirements 2011 A legislative instrument that outlines the requirements for providers to capture and provide data to ASQA. Department of Education, Employment and Workplace Relations (DEEWR) Australian Government department responsible for education and workplace training, transition to work and conditions and values in the workplace. Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE) Australian Government department responsible for shaping Australia s future economy through skills, learning, discovery and innovation. Replaced by the Department of Industry in September English Language Intensive Courses for Overseas Students (ELICOS) English language programs for students who require English language training before commencing formal studies in Australia. financial viability risk assessment(s) Structured risk assessments of common indicators of financial performance, which determine an organisation s likely business continuity and its financial capacity to deliver quality outcomes. Financial Viability Risk Assessment Requirements 2011 A legislative instrument to ensure that an applicant or provider has the necessary financial resources for business continuity and can deliver quality outcomes. References 151

162 Fit and Proper Person Requirements 2011 A legislative instrument used to determine fit and proper person requirements for persons who exercise a degree of control or influence over the operation of a registered training organisation. general direction A direction given by the Australian Skills Quality Authority on the way in which the VET Quality Framework and other conditions defined in the National Vocational Education and Training Regulator Act 2011 are to be complied with. high risk A high-risk provider has greater potential for non-compliance with the relevant standards, as determined by its history of compliance, the transparency and stability of its governance structures, and its scope of operational delivery. industry The bodies that have a stake in the training, assessment and client services provided by vocational education and providers. industry organisation An organisation representing an industry, including peak business and employer organisations and industry advisory bodies, such as the Industry Skills Councils. Industry Skills Council(s) National bodies recognised and funded by the Australian Government to develop and maintain training packages specific to particular industry areas. low risk A low-risk provider is deemed to have less potential for non-compliance with the national standards, as determined by the provider s history of audit compliance, the transparency and stability of its governance structures, and its scope of operational delivery. multi-sector provider Providers that offer courses in two or more sectors, e.g. providers that offer both VET and higher education courses National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students 2007 (National Code) A set of nationally consistent standards that governs the protection of overseas students and delivery of courses to those students by providers registered on the Commonwealth Register of Institutions and Courses for Overseas Students. national register The official national register of information on training packages, qualifications, courses, units of competency and registered training organisations, online at training.gov.au National Skills Standards Council Committee that provides advice to the Standing Council for Tertiary Education, Skills and Employment (SCOTESE) on national standards for regulation of vocational education and training. 152 Australian Skills Quality Authority Annual Report

163 National Standards for ELICOS Providers and Courses 2011 (ELICOS Standards) Guidelines for designated authorities to make recommendations for acceptance of providers to be registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS). national VET regulator The Australian Skills Quality Authority, the national body responsible for registering training providers and accrediting courses in Australia. National Vocational Education and Training Regulator Act 2011 National legislation that governs the regulation of the vocational education and training sector in Australia. non-compliance Non-compliance occurs when the requirements of the VET Quality Framework or other relevant standards or registration conditions have not been met. non-referring state States that did not transfer regulatory powers to the national VET regulator, i.e. Western Australia and Victoria. Notice of intention ASQA may issue a provider with a notice of intent to apply a sanction or condition of registration where non-compliances are identified. The notice of intent letter outlines the proposed sanction or condition, the reasons for the sanction and invites the provider to submit evidence within 20 working days as to why the action should not be taken by ASQA. overseas student A person studying onshore only with visa subclasses 570 to 575, excluding students on Australianfunded scholarships or sponsorship or students undertaking study while in possession of other temporary visas. Overseas Students Ombudsman The Overseas Students Ombudsman investigates complaints about problems that overseas students have with private education and training in Australia. provider Provider may refer to: a registered training organisation, or a vocational education and training provider that is also registered on the Commonwealth Register of Institutions and Courses for Overseas Students to deliver to overseas students, or a provider that is registered on the Commonwealth Register of Institutions and Courses for Overseas Students and delivers English Language Intensive Courses for Overseas Students. qualification Formal certification, issued by a relevant approved body, in recognition that a person has achieved learning outcomes or competencies relevant to identified individual, professional, industry or community needs. reconsideration ASQA internal reconsideration of a reviewable decision. References 153

164 referral of powers States have the ability to give legislative control to the federal government in areas which have been deemed in the national interest. referring state States which have referred their powers relating to the regulation of VET providers to the national regulator. registered training organisation (RTO) An organisation, registered in accordance with the requirements of the VET Quality Framework, to provide specific vocational education and training and/or assessment services. registration ASQA registers both VET providers as registered training organisations and providers wishing to enrol overseas students who are on student visas as CRICOS providers. VET registration is a nationally recognised indication that a training organisation can deliver, assess and issue qualifications or statements of attainment to a nationally agreed standard for the specific vocational education and training qualifications it is registered to provide. Providers delivering training and assessment to overseas students who have Australian student visas must be registered on CRICOS. registration audit The systematic and documented process used to assess a provider s compliance with the standards that apply to a registration application (registration applications are applications for initial registration, renewal of registration or change to scope of registration). The cost of a registration audit is included in the relevant application or application assessment fee. reporting period In the context of ASQA s Annual Report, the reporting period is the period from 1 July 2013 until 30 June reviewable decision Reviewable decisions include those decisions listed in section 199 of the National Vocational Education and Training Regulator Act Reviewable decisions may include decisions to cancel or not a provider s registration, or to impose sanctions upon a provider. risk assessment Assessment conducted to gather data about operations of providers including through undertaking audits. risk rating A rating assigned to each provider by ASQA to indicate the potential effects and likelihood of a provider not complying with its legislative obligations. Risk ratings are developed following a risk assessment and determine the extent to which ASQA will monitor a provider. scope of registration The particular services and products that a provider is registered to provide. 154 Australian Skills Quality Authority Annual Report

165 Standards for NVR Registered Training Organisations 2012 The national standards against which applicants for registration as a VET provider, and existing VET providers, are assessed. Standards for VET Accredited Courses 2012 A legislative instrument used to formally identify the requirements for accrediting VET courses. Standards for VET Regulators 2011 A legislative instrument used to formally identify the standards for VET Regulators performing functions under the National Vocational Education and Training Regulator Act Standing Council on Tertiary Education, Skills and Employment (SCOTESE) Council with high-level policy responsibility for the national tertiary education, skills and employment system, including strategic policy, priority setting, planning and performance, and key cross-sectoral issues. Strategic Review Industry-wide reviews undertaken by ASQA to obtain information about areas of the training sector that may require targeted regulatory action. training package Package that specifies the skills and knowledge required to perform effectively in the workplace. VET Quality Framework A set of standards and conditions used by ASQA to assess whether a registered training organisation meets the requirements for registration. The VET Quality Framework comprises: the Standards for National VET Regulator Registered Training Organisations the Fit and Proper Person Requirements the Financial Viability Risk Assessment Requirements the Data Provision Requirements, and the Australian Qualifications Framework. VET Reform Taskforce A taskforce established by the Department of Industry to engage with industry and the training sector and identify opportunities for reform. VET Regulatory Reform ASQA is implementing a range of reforms to the way it regulates Australia s vocational education and training sector. These reforms are focused on making it easier for high-performing providers to meet their obligation to deliver quality training and assessment, while increasing scrutiny on providers who do not provide quality training. vocational education and training Post-compulsory education and training, excluding degree and higher level programs delivered by further education institutions, which provides people with occupational or work-related knowledge and skills. References 155

166 List of abbreviations Abbreviation Definition ACCI Australian Chamber of Commerce and Industry ACPET Australian Council for Private Education and Training ACT Australian Capital Territory AGS Australian Government Solicitors APS Australian Public Service ASQA Australian Skills Quality Authority CCA Community Colleges Australia CDPP Commonwealth Director of Public Prosecutions CEIs Chief Executive s Instructions CEO Chief Executive Officer COAG Council of Australian Governments CPSISC Construction and Property Services Industry Skills Council CRICOS Commonwealth Register of Institutions and Courses for Overseas Students CRIS Cost Recovery Impact Statement EDRMS Electronic Document and Records Management System ELICOS English Language Intensive Courses for Overseas Students ELT English Language Teaching ERTOA Enterprise Registered Training Organisation Association ESOS Act Education Services for Overseas Students Act 2000 FOI Freedom of Information FMA Act Financial Management and Accountability Act IBSA Innovation and Business Skills Australia ICT Information and Communications Technology IPS Information Publication Scheme ISC Industry Skills Council KPIs key performance indicators MoU Memorandum of Understanding NCVER National Centre for Vocational Education and Training NEAS National English Language Teaching Accreditation Scheme NSSC National Skills Standards Council NSW New South Wales 156 Australian Skills Quality Authority Annual Report

167 Abbreviation Definition NT Northern Territory NVR national VET regulator NVR Act National Vocational Education and Training Regulator Act 2011 OBPR Office of Best Practice Regulation PBS Portfolio Budget Statements PGPA Act Public Governance, Performance and Accountability Act 2013 PSPF Protective Security Policy Framework QLD Queensland QMS Quality Management System RPL recognition of prior learning RTO registered training organisation SA South Australia SCOTESE Standing Council on Tertiary Education, Skills and Employment SES Senior Executive Service TAFE Technical and Further Education TAS Tasmania TDA TAFE Directors Australia TEQSA Tertiary Education quality and Standards Agency VET vocational education and training VIC Victoria WA Western Australia References 157

168 List of requirements Part of Report Description Page Letter of transmittal Table of contents iii iv vii Index 161 Glossary Contact officer(s) Internet home page address and Internet address for report ii ii Review by Chief Commissioner Review by Chief Commissioner 1 2 Departmental Overview Role and functions 4 7 Organisational structure 12 Outcome and program structure 13 Report on Performance Review of performance during the year in relation to programs and contribution to outcomes Actual performance in relation to deliverables and KPIs set out in Portfolio Budget statements Narrative discussion and analysis of performance Performance of purchaser/provider arrangements 68, 71 Trend information 18, 20 3, 25, 29 30, 50, 54 5 Performance against service charter, complaints data, and response to complaints 42 5, 63 Discussion and analysis of the department s financial performance 66 9 Discussion of any significant changes in financial results from the prior year, from budget or anticipated to have a significant impact on future operations. Agency resource statement and summary resource tables by outcomes Australian Skills Quality Authority Annual Report

169 Part of Report Description Page Management and Accountability Corporate Governance Agency heads are required to certify that their agency comply with the Commonwealth Fraud Control Guidelines. iii, 65 Statement of the main corporate governance practices in place 62 6 Senior management committees and their roles 62 3 Names of the senior executive and their responsibilities Corporate and operational plans and associated performance reporting and review Internal audit arrangements including approach adopted to identifying areas of significant financial or operational risk and arrangements to manage those risks Policy and practices on the establishment and maintenance of appropriate ethical standards How nature and amount of remuneration for SES officers is determined , , 122 External Scrutiny Judicial decisions and decisions of administrative tribunals 74 6 Reports by the Auditor-General, a Parliamentary Committee or the Commonwealth Ombudsman 1, 66, 77 Management of Human Resources Assessment of effectiveness in managing and developing human resources to achieve departmental objectives 70 3 Workforce planning, staff retention and turnover 70, 72 3 Impact and features of enterprise or collective agreements, individual flexibility arrangements (IFAs), determinations, common law contracts and AWAs 73 Training and development undertaken and its impact 70 Productivity gains 4, 38 41, 65, 66 Work health and safety performance 67, 71 Statistics on staffing 72 3 Performance pay 73 References 159

170 Part of Report Description Page Other Assessment of effectiveness of assets management 68 Purchasing Assessment of purchasing against core policies and principles 67 9 Consultants Australian National Audit Office Access Clauses Summary statement detailing the number of new consultancy services contracts let during the year; the total actual expenditure on all new consultancy contracts let during the year (inclusive of GST); the number of ongoing consultancy contracts that were active in the reporting year; and the total actual expenditure in the reporting year on the ongoing consultancy contracts (inclusive of GST). Statement noting that information on contracts and consultancies is available through the AusTender website. Absence of provisions in contracts allowing access by the Auditor-General Exempt contracts Contracts exempt from the AusTender 68 Financial Statements Financial Statements Other Mandatory Information Work health and safety (Schedule 2, Part 4 of the Work Health and Safety Act 2011) Advertising and Market Research (Section 311A of the Commonwealth Electoral Act 1918) and statement on advertising campaigns Ecologically sustainable development and environmental performance (Section 516A of the Environment Protection and Biodiversity Conservation Act 1999) 67, Grant programs 145 Disability reporting explicit and transparent reference to agency level information available through other reporting mechanisms 145 Information Publication Scheme statement 145 Agency Resource Statements and Resources for Outcomes Australian Skills Quality Authority Annual Report

171 Index A abbreviations, accountability, accredited courses, address and contact details, 146 Administrative Appeals Tribunal, 74, 75 6 administrative sanctions, advertising and market research, aged and community care training, 39 agency overview, 4 13 agency resource statement, 147 applications, 1, asbestos removal training review, 42 assets management, 68 Audit Committee, 63 audits independent auditor s report, 80 1 internal audit and reporting, 59, 64 7 of providers, 22 4, 56 see also provider surveys Regulator Audit Framework, 65 see also reviews AusTender, 68 Australian Government Solicitor, 46 Australian National Audit Office access clauses in contracts, 68 audit findings KPI, 66 Australian Public Service Values and Code of Conduct, 65 B business continuity, 63 business processes, 57 9 C charging see fees and charges Chief Commissioner, 10 review by, 1 2 role, 62 childcare and early childhood learning training, 41 2 Commissioners, engagement with stakeholders, meetings, 62 committees, 63, 70 Commonwealth Director of Public Prosecutions, 46 Commonwealth Register of Institutions and Courses for Overseas Students see CRICOS communication with providers, 17, 50, 77 complaints against training providers, 42 5, 63 construction industry training, consultants, 68 contact officer, 146 contracts, 68 corporate governance, 62 6 cost recovery, 33, 69 course accreditation, CRICOS providers, 8, 19 see also providers D decisions by ASQA see regulatory decisions Department of Finance and Deregulation, 33 disability reporting, 145 E ecologically sustainable development and environmental performance, 144 education for overseas students, 8 Education Services for Overseas Students Act 2000, 8, 45 ELICOS providers, 8, 19, 51 see also providers ELICOS Regulator Provider Forum, 49 employees see staff employers survey, 48 enforcement, 45 6 English Australia, 49 English Language Intensive Courses for Overseas Students see ELICOS enterprise agreement, 73 establishment of ASQA, 5 ethical standards, 65 exempt contracts, 68 expenses and resources for outcome, 148 external scrutiny, 74 7 References 161

172 F Federal Court, 75, 76 fees and charges, 1, 9, 33 4, 69 financial management and performance, 66 9 agency resource statement, 147 expenses and resources for outcome, 148 financial statements, fraud control, iii, 65 functions, 4 7 future (outlook), 2 G glossary, governance, 62 6 grant programs, 145 H Health and Safety Committee, 63 horse-riding training, 41 2 human resources management, 70 3 see also staff I independent auditor s report, 80 1 industry engagement, 49 50, 51 Info line, 50 1 information and communications technology, 2, 57 8, 77 Information Publication Scheme, 145 Intergovernmental Agreement for Regulatory Reform of Vocational Education and Training, 5 internal audit and reporting, 59, 64 7 investigation and enforcement, 45 6 J judicial decisions, 75, 76 L legislation and legislative instruments, 5, 8 9 letter of transmittal, iii M management and accountability, market research, marketing and advertising practices of RTOs, 40 1 mission statement, 5 N National Centre for Vocational Education and Training surveys, 48 National Skills Standards Council, 31, 64 National Vocational Education and Training Regulator Act 2011, 5, 6, 8, 45, 62 National Vocational Education and Training Regulator (Charges) Act 2012, 9 O Office of Best Practice Regulation, 65 online communication channels, 50 operational plan, viii, 52, 64 organisational structure, 12 outcome and program structure, 13 outlook, 2 overview, 4 13 P payroll, 71 people and culture, 70 3 Performance Development Framework, 70 performance pay, 73 performance report, applications, audits of providers, 22 4, 56 key performance indicators, 21, 23, 25, 28 9, 31, 32, 34, 38, 48, 53, 58, 64, 65, 66 7, 69, 70 1 regulation, regulatory decisions, 24 6, 74 6, summary, plans and planning fraud control, 65 Information Publication Scheme plan, 145 operational plan, viii, 52, 64 strategic plan, viii, 52 policy advice, Australian Skills Quality Authority Annual Report

173 portfolio membership, 13 procurement see purchasing Program 1.1: Regulation and advice objective and deliverables, 13 protective security, 63 provider applications, 1, provider surveys, 1, 32 3, 34, 52, 55 6 see also stakeholder surveys providers audits, 22 4 compliance, 22 8 consultation with, 48 9 regulatory decisions by ASQA, 24 6, 74 6, Public Governance and Performance Accountability Act 2013, 63 purchaser-provider arrangements, 68, 71 purchasing, 67 9 Q Quality Management System, 59, 65 R regulation, applications processed, audits of providers, 22 4 course accreditation, objective, 18 performance summary, 16 provider compliance with standards, 26 8 regulation of RTOs and providers, regulator report, 64 regulatory decisions, 24 6 Regulator Audit Framework, 65 regulatory accountability and transparency, 31 4 ASQA reporting mechanisms, 31 reasonable costs, 33 4 timely regulatory processes, 31 3 regulatory approach see risk-based approach to regulation regulatory arrangements, 1, 5 9 reform, 17, 46 7 regulatory burden on providers, 1, 2, 4, 16, 17, 34, 36, 46, 57 regulatory decisions, 24 6, review of decisions, 74 6 regulatory reform see VET Regulatory Reform program remuneration, 73, 122 revenue, 69 reviews of ASQA decisions, 74 6 of ASQA processes, with ASQA response, 1, 77 internal, 63 of national standards, 63, 64, 77 Strategic Reviews, 1, 17, see also audits risk management, 77 risk-based approach to regulation, complaints handling, 42 5 investigation and enforcement, 45 6 review of, 1, 77 risk assessment and risk model, 36 8 Strategic Reviews, VET Regulatory Reform program, 17, 46 7 role and functions, 4 7 RTOs applications, marketing and advertising practices, 40 1 regulation of, standards for see Standards for NVR Registered Training Organisations (RTOs) 2012 Strategic Reviews of, see also providers S salaries see remuneration Security Committee, 63 security industry training, 41 2 senior executive, Senior Executive Service (SES) officers remuneration, 73, 122 senior management committees, 62 3 Senior Management Group, 62, 63 service delivery, 50 1 Shared Services Centre, 68, 71 staff employment arrangements, 73 References 163

174 performance development, 70 satisfaction, 70 statistics, 72 3 Staff Consultative Committee, 70 stakeholder relationships, 17, stakeholder surveys, 1, 52 4, 64 see also provider surveys Standards for NVR Registered Training Organisations (RTOs) 2012, 1 feedback from stakeholders, 1 2 non-compliance, 26 provider compliance, 26 8 review of, 2, 17, 63, 64, 77 Standards for VET Accredited Courses 2012, 29 Standing Council on Tertiary Education, Skills and Employment, 1, 77 strategic plan, viii, 52 Strategic Reviews, 1, 17, structure see organisational structure students survey, 48 V values, 65 VET Quality Framework, 8, 18 VET Reform Taskforce, 64 VET Regulatory Reform program, 17, 46 7 VET sector, 4 operating revenues, 34 vision statements, 5 W White Card for Australia s construction industry training, work health and safety, 71 audit report, 67 Work Health and Safety Act 2011, 63, 71 workforce planning, 70 T tendering see purchasing Tertiary Education Quality and Standards Agency, 49 tribunals, 74, Australian Skills Quality Authority Annual Report

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